Netease Intrinsic Value – China Removes Official After Gaming Rules Debacle, Tencent and NetEase Reap Benefits

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NETEASE ($NASDAQ:NTES): Shares of Tencent and NetEase rose following news of China removing a senior official in the wake of a dispute over gaming rules, according to a report. It is one of China’s largest and most successful online game publishers and its stock is traded on the Nasdaq Global Select Market under the symbol NTES. NetEase has achieved success through its game-centric business model, as well as its investments in other internet companies and research in emerging internet technologies.

The company has developed and published a number of online PC and mobile games, including Fantasy Westward Journey, Journey to the West, Chronicles of Divinity, Ghost II, and Moonlight Blade. In addition to games, the company also provides online music services, an email service, e-commerce platforms, and search engine and advertising services.

Price History

On Wednesday, Chinese internet giant NetEase experienced a jump in its stock prices after a Chinese official was removed from his position due to a gaming rules debacle. The stock opened at $93.6 and closed at $96.2, up by 4.0% from its last closing price of 92.5. The debacle began when officials at China’s Ministry of Education enforced rules aimed at protecting minors from excessive gaming. The rules, however, created chaos and confusion among game developers and players, leading to the removal of an official from his position.

The aftermath of this incident was felt throughout China’s gaming industry, as both Tencent and NetEase benefited from the official’s removal. NetEase’s stock opened higher on Wednesday as investors saw potential in the company’s gaming sector. Tencent, on the other hand, saw its share prices rise as well with the possibility of more relaxed gaming regulations in China. Live Quote…

About the Company

Income Snapshot

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Cash Flow Snapshot

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Balance Sheet Snapshot

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Key Ratios Snapshot

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Analysis – Netease Intrinsic Value

GoodWhale has conducted an analysis of NETEASE‘s wellbeing and have come to the conclusion that its fair value is around $101.1 – calculated using our proprietary Valuation Line. This means that the current price of $96.2 is a fair price, but is undervalued by 4.8%. We believe this presents a great opportunity for investors looking to make a return on their investments. This is an especially attractive prospect taking into consideration NETEASE’s strong and stable performance in recent years. More…

Summary

NetEase, one of China’s leading tech companies, experienced a surge in its stock price on the same day that the Chinese government backtracked on its stance towards gaming regulations. This shift in policy created a favorable environment for NetEase and other tech firms, such as its rival Tencent. Investors saw this as an opportunity to capitalize on the company’s potential for growth and increase their position in the stock.

In terms of investing analysis, NetEase looks to be a solid bet given its experienced management, strong balance sheet, and past history of generating consistent returns. Overall, NetEase appears to be a sound investment option for investors looking to increase their exposure to the technology sector.