Netease Intrinsic Value – Regulator to Study Concerns After Tencent and NetEase Games Get Approval in China
December 27, 2023
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NETEASE ($NASDAQ:NTES): China recently granted approval to Tencent and NetEase for their respective gaming operations. This decision has been met with some apprehension, as a regulator is reported to be studying potential concerns with the draft of new gaming rules. NetEase is a Chinese internet technology company and one of the largest online and mobile game developers in China. It is also one of the leading operators of PC and mobile online games in China, according to its official website.
In addition, NetEase’s stock is traded on both the Nasdaq and the Hong Kong Stock Exchange. With the recent approval of Tencent and NetEase’s gaming operations, the Chinese regulator is reportedly studying potential concerns with the draft of new gaming rules. This could potentially significantly affect the gaming industry in the country and abroad in turn.
Stock Price
On Tuesday, regulator approval for Tencent and NetEase’s gaming business sparked a rise in share prices for both companies. The opening price of NETEASE stock was $92.2 and it closed at the same amount, a 5.2% increase from its prior closing price of 87.6. This news has caused some concern as many investors feel that the gaming sector has been overly successful in recent years and there may be issues with monopolies and unfair practices.
The regulator has promised to keep a close eye on the situation and take appropriate steps to ensure fairness in the industry. It is yet to be seen what the outcomes of this study will be, but investors should be aware of the potential risks involved with investing in these gaming companies. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Netease. NetEase_Games_Get_Approval_in_China”>More…
| Total Revenues | Net Income | Net Margin |
| 101.68k | 26.79k | 25.2% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Netease. NetEase_Games_Get_Approval_in_China”>More…
| Operations | Investing | Financing |
| 32.53k | -2.45k | -32.79k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Netease. NetEase_Games_Get_Approval_in_China”>More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 171.58k | 47.63k | 186.03 |
Key Ratios Snapshot
Some of the financial key ratios for Netease are shown below. NetEase_Games_Get_Approval_in_China”>More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 13.4% | 20.3% | 24.9% |
| FCF Margin | ROE | ROA |
| 27.9% | 13.5% | 9.2% |
Analysis – Netease Intrinsic Value
At GoodWhale, we have conducted an in-depth analysis of the wellbeing of NETEASE. After evaluating various factors, our proprietary Valuation Line estimates the fair value of NETEASE stock to be $101.1 per share. At present, NETEASE stock is traded at $92.2, representing a fair price that is undervalued by 8.8% compared to our Valuation Line. Thus, this appears to be an attractive entry point for investors looking to acquire NETEASE stock. More…
Summary
NetEase, a Chinese internet giant, saw its stock price increase following news that Tencent and NetEase games were approved by the Chinese government. The regulator is also studying a draft for new gaming rules. This positive news is great news for investors in NetEase, as it signals a bright future for the company in the gaming sector. Furthermore, this indicates that the Chinese government is recognizing the importance of the gaming industry and will continue to support its growth.
This is encouraging for investors, as NetEase is well-positioned to benefit from continued growth in gaming. With an exciting product portfolio, strong financials, and a strong presence in China, NetEase is an attractive investment for those looking to capitalize on the booming gaming industry in China.
