NTES: Strong Content Producer Generates Steady Growth And Cash Flow Positive for NTES Due To Its Position In Game Business
NTES will report 3Q23 results on November 16th with a conference call at 7am ET. We are positive on NTES’s 3Q23 mobile game performance as the company released several new games, which we expect to contribute to revenue in 3Q23 and 4Q23. More importantly, we are expecting NTES to make more improvement on its margins as the company continues to downsize its Cloud Music business to optimize the model, in addition to getting rid of lower margin contribution from WoW. Higher growth in topline and improvement in earnings can lead to upside in its cash flow. As China has resumed its normal game approval process, we expect NTES to continue to maintain its stable growth in China, while its overseas game studios eventually can make more contributions to topline growth.
T.H. Capital is an independent research and investment advisory firm specializing in China. We offers real-time, on-the-ground, bottom-up research across a wide spectrum from macro and industry analysis to company specific projects; from China ADRs to international names that have meaningful exposure to China market. We deliver relevant, comprehensive and data driven research adding immense value to clients.
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