NasdaqGS:NTES

Stock Analysis Report

Executive Summary

NetEase, Inc. operates an interactive online community in the People’s Republic of China.


Snowflake Analysis

Excellent balance sheet with solid track record.


Similar Companies

Share Price & News

How has NetEase's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: NTES has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-7.9%

NTES

-8.3%

US Entertainment

-11.2%

US Market


1 Year Return

46.1%

NTES

8.1%

US Entertainment

4.1%

US Market

Return vs Industry: NTES exceeded the US Entertainment industry which returned 8.1% over the past year.

Return vs Market: NTES exceeded the US Market which returned 4.1% over the past year.


Shareholder returns

NTESIndustryMarket
7 Day-7.9%-8.3%-11.2%
30 Day-3.2%-5.5%-9.5%
90 Day0.7%-4.7%-5.4%
1 Year49.0%46.1%8.9%8.1%6.2%4.1%
3 Year12.2%8.2%40.7%36.2%30.3%21.9%
5 Year236.3%215.2%77.9%67.0%55.0%38.0%

Price Volatility Vs. Market

How volatile is NetEase's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is NetEase undervalued compared to its fair value and its price relative to the market?

21.54x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: NTES ($317.6) is trading above our estimate of fair value ($312.11)

Significantly Below Fair Value: NTES is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: NTES is poor value based on its PE Ratio (21.5x) compared to the Entertainment industry average (21.2x).

PE vs Market: NTES is poor value based on its PE Ratio (21.5x) compared to the US market (16.7x).


Price to Earnings Growth Ratio

PEG Ratio: NTES is poor value based on its PEG Ratio (3x)


Price to Book Ratio

PB vs Industry: NTES is overvalued based on its PB Ratio (4.7x) compared to the US Entertainment industry average (2.1x).


Next Steps

Future Growth

How is NetEase forecast to perform in the next 1 to 3 years based on estimates from 27 analysts?

7.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NTES's forecast earnings growth (7.2% per year) is above the savings rate (1.7%).

Earnings vs Market: NTES's earnings (7.2% per year) are forecast to grow slower than the US market (12.9% per year).

High Growth Earnings: NTES's earnings are forecast to grow, but not significantly.

Revenue vs Market: NTES's revenue (9.9% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: NTES's revenue (9.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NTES's Return on Equity is forecast to be low in 3 years time (19.4%).


Next Steps

Past Performance

How has NetEase performed over the past 5 years?

12.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NTES has high quality earnings.

Growing Profit Margin: NTES's current net profit margins (22.4%) are higher than last year (9.2%).


Past Earnings Growth Analysis

Earnings Trend: NTES's earnings have grown by 12.9% per year over the past 5 years.

Accelerating Growth: NTES's earnings growth over the past year (115.8%) exceeds its 5-year average (12.9% per year).

Earnings vs Industry: NTES earnings growth over the past year (115.8%) exceeded the Entertainment industry -8.9%.


Return on Equity

High ROE: NTES's Return on Equity (18.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is NetEase's financial position?


Financial Position Analysis

Short Term Liabilities: NTES's short term assets (CN¥85.1B) exceed its short term liabilities (CN¥38.2B).

Long Term Liabilities: NTES's short term assets (CN¥85.1B) exceed its long term liabilities (CN¥839.9M).


Debt to Equity History and Analysis

Debt Level: NTES's debt to equity ratio (23%) is considered satisfactory.

Reducing Debt: NTES's debt to equity ratio has increased from 8.7% to 23% over the past 5 years.

Debt Coverage: NTES's debt is well covered by operating cash flow (102.3%).

Interest Coverage: NTES earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: NTES has a low level of unsold assets or inventory.

Debt Coverage by Assets: NTES's debt is covered by short term assets (assets are 5.1x debt).


Next Steps

Dividend

What is NetEase's current dividend yield, its reliability and sustainability?

2.17%

Current Dividend Yield


Dividend Yield vs Market

company2.2%marketbottom25%1.6%markettop25%4.1%industryaverage1.5%forecastin3Years1.4%

Current dividend yield vs market & industry

Notable Dividend: NTES's dividend (2.17%) is higher than the bottom 25% of dividend payers in the US market (1.62%).

High Dividend: NTES's dividend (2.17%) is low compared to the top 25% of dividend payers in the US market (4.13%).


Stability and Growth of Payments

Stable Dividend: NTES has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: NTES's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (46.6%), NTES's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: NTES's dividends in 3 years are forecast to be well covered by earnings (22.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

12.5yrs

Average management tenure


CEO

William Ding (47yo)

14.3yrs

Tenure

0

Mr. Lei Ding, also known as William, founded NetEase, Inc. and has been its Chief Executive Officer since November 2005. Mr. Ding founded NetEase Capital in April 2012. Mr. Ding is a Director of Youdao, In ...


Leadership Team

NamePositionTenureCompensationOwnership
Lei Ding
Founder14.3yrsno data45.51% CN¥18.7b
Onward Choi
Consultant0yrsno datano data
Zhaoxuan Yang
Chief Financial Officer2.7yrsno datano data
Margaret Shi
IR Director0yrsno datano data
Feng Zhou
Senior Vice President of Search Operations12.5yrsno datano data

12.5yrs

Average Tenure

44yo

Average Age

Experienced Management: NTES's management team is seasoned and experienced (12.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Lei Ding
Founder14.3yrsno data45.51% CN¥18.7b
Sui Bau Tong
Director20.2yrsno datano data
Ting Bun Lee
Director17.8yrsCN¥12.00kno data
Lun Feng
Director14.6yrsCN¥14.32kno data
Michael Leung
Director17.6yrsCN¥54.00kno data
Joseph Tong
Director16.9yrsCN¥54.00kno data
Alice Cheng
Independent Non-Executive Director12.7yrsCN¥66.86kno data

17.6yrs

Average Tenure

56yo

Average Age

Experienced Board: NTES's board of directors are seasoned and experienced ( 17.6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

NetEase, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: NetEase, Inc.
  • Ticker: NTES
  • Exchange: NasdaqGS
  • Founded: 1997
  • Industry: Interactive Home Entertainment
  • Sector: Media
  • Market Cap: US$41.194b
  • Shares outstanding: 127.96m
  • Website: https://ir.netease.com

Number of Employees


Location

  • NetEase, Inc.
  • Building No. 7, West Zone
  • Zhongguancun Software Park (Phase II)
  • Beijing
  • 100193
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
NTESNasdaqGS (Nasdaq Global Select)YesADR EACH REPR 25 COM STK USD0.0001USUSDJun 2000
NEHDB (Deutsche Boerse AG)YesADR EACH REPR 25 COM STK USD0.0001DEEURJun 2000
NTES NBMV (Bolsa Mexicana de Valores)YesADR EACH REPR 25 COM STK USD0.0001MXMXNJun 2000
NTESSWX (SIX Swiss Exchange)YesADR EACH REPR 25 COM STK USD0.0001CHCHFJun 2000
NTESWBAG (Wiener Boerse AG)YesADR EACH REPR 25 COM STK USD0.0001ATEURJun 2000
0K6GLSE (London Stock Exchange)YesADR EACH REPR 25 COM STK USD0.0001GBUSDJun 2000

Biography

NetEase, Inc. operates an interactive online community in the People’s Republic of China. The company operates in four segments: Online Games Services, E-Commerce, Advertising Services, and Innovative Businesses and Other Services. It offers various games in a range of genres through mobile devices and PCs, including role-playing games, MMORPGs, battle arena games, simulation games, collectible card games, first-person shooter games, sandbox games, and other types of games to the Chinese market. The company also operates Kaola that sells imported maternity and baby products, skincare and cosmetics, and other general merchandise; and Yanxuan, which sells its private label products, including apparel, homeware, kitchenware, and other general merchandise. In addition, it operates NetEase News App and NetEase Websites, which provide Internet users with Chinese language-based online services that are centered around content and interactive community. Further, the company provides online advertising services comprising banner advertising, channel sponsorships, direct email, interactive media-rich sites, sponsored special events, games, contests, and other activities. Additionally, it offers online services, such as NetEase CC, a live video streaming platform; NetEase Cloud Music, a music-streaming platform; NetEase Youdao Education, an online platform offering educational content and solutions; EaseRead, an online reading platform; and NetEase Pay, a payment platform, as well as email services to individuals and corporates. The company has a strategic partnership with Marvel Entertainment, LLC to create original entertainment content based on Marvel stories internationally. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Beijing, the People’s Republic of China. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/29 00:46
End of Day Share Price2020/02/28 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.