Huatong Securities International: “Recommended” rating for NetEase -S (09999), overall profitability and cash generation ability remain steady

The Zhitong Finance App learned that Huatong Securities International released a research report saying that NetEase's (09999) revenue for the third quarter of 2025 was 28,400 million yuan (+8.2%), with net profit attributable to the mother of 8,600 million yuan (non-GAAP net profit of 9,500 million yuan, all with double digit growth over the same period). Gross margin remained high and net interest rate of about 30%; net operating cash flow of 12,900 million yuan, accounting for about 45% of revenue. The net cash ratio of 153,200 million yuan at the end of the period was significantly higher than the total basic debt of 53,500 million yuan. Steady support Next, the company's overall profitability and ability to generate cash remain stable. The investment rating is recommended.

The bank pointed out that Q3 revenue from the game business was about 23,300 million yuan (+11.8%, gross margin of about 69%), accounting for about 82% of revenue. “16 Sounds of Yan Yun” and “Marvel Battle” combined with the return of Blizzard games led to deferred revenue +25% YoY and +15% month-on-month; Cloud Music's Q3 revenue was about 1,964 million yuan, gross profit of 695 million yuan (+8.3%). In the innovative business, YouDao Q3 earned about 1,600 million yuan (+3.6%). AI subscription and online marketing-driven management Profits have increased dramatically), revenue from innovation and other sectors is about 140 million yuan, and businesses such as careful selection and data intelligence are in the reshaping stage. Revenue is expected to increase by 10.0% and net profit by 9.2% in 2025. Corresponding to 2025-2027 PE is 17.41, 25.66, and 20.65 times, respectively.