Loading...

We've got a brand new version of Simply Wall St! Try it out

NetEase

Nasdaq:NTES
Snowflake Description

Excellent balance sheet and fair value.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
NTES
Nasdaq
$33B
Market Cap
  1. Home
  2. US
  3. Media
Company description

NetEase, Inc. operates an interactive online community in the People’s Republic of China. The last earnings update was 8 days ago. More info.


Add to Portfolio Compare Print
NTES Share Price and Events
7 Day Returns
6.4%
NasdaqGS:NTES
-3.6%
US Entertainment
-3.1%
US Market
1 Year Returns
25.1%
NasdaqGS:NTES
3.3%
US Entertainment
-1.7%
US Market
NTES Shareholder Return
  7 Day 30 Day 90 Day 1 Year 3 Year 5 Year
NetEase (NTES) 6.4% 2.4% -3% 25.1% 23.2% 194.6%
US Entertainment -3.6% -7.7% -3.9% 3.3% 55.7% 71.8%
US Market -3.1% -5.3% -1.2% -1.7% 28.2% 35%
1 Year Return vs Industry and Market
  • NTES outperformed the Entertainment industry which returned 3.3% over the past year.
  • NTES outperformed the Market in United States of America which returned -1.7% over the past year.
Price Volatility
NTES
Industry
5yr Volatility vs Market
Related Companies

Value

 Is NetEase undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of NetEase to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.
Raw Data

Below are the data sources, inputs and calculation used to determine the intrinsic value for NetEase.

NasdaqGS:NTES Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 27 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 8.4%
Perpetual Growth Rate 10-Year US Government Bond Rate 2.7%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for NasdaqGS:NTES
Data Point Calculation/ Source Result
Risk-Free Rate 10-Year US Govt Bond Rate 2.7%
Equity Risk Premium S&P Global 6%
Entertainment Unlevered Beta Simply Wall St/ S&P Global 0.89
Re-levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
= 0.886 (1 + (1- 25%) (6.14%))
0.951
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm)
0.95
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 2.73% + (0.951 * 5.96%)
8.4%

Discounted Cash Flow Calculation for NasdaqGS:NTES using 2 Stage Free Cash Flow to Equity Model

The calculations below outline how an intrinsic value for NetEase is arrived at by discounting future cash flows to their present value using the 2 stage method. We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.

Note: Free cash flow to equity valuations ignore the company's cash or debt.

NasdaqGS:NTES DCF 1st Stage: Next 10 year cash flow forecast
Levered FCF (CNY, Millions) Source Present Value
Discounted (@ 8.4%)
2020 12,135.68 Analyst x9 11,195.54
2021 13,714.62 Analyst x8 11,672.00
2022 19,209.49 Analyst x1 15,081.98
2023 22,323.99 Est @ 16.21% 16,169.44
2024 25,040.44 Est @ 12.17% 16,731.93
2025 27,378.42 Est @ 9.34% 16,876.93
2026 29,392.05 Est @ 7.35% 16,714.58
2027 31,145.97 Est @ 5.97% 16,339.86
2028 32,702.07 Est @ 5% 15,827.14
2029 34,113.58 Est @ 4.32% 15,231.25
Present value of next 10 years cash flows CN¥151,840.65
NasdaqGS:NTES DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value = FCF2029 × (1 + g) ÷ (Discount Rate – g)
= CN¥34,113.58 × (1 + 2.73%) ÷ (8.4% – 2.73%)
CN¥618,350.37
Present Value of Terminal Value = Terminal Value ÷ (1 + r)10
= CN¥618,350.37 ÷ (1 + 8.4%)10
CN¥276,084.97
NasdaqGS:NTES Total Equity Value
Calculation Result
Total Equity Value = Present value of next 10 years cash flows + Terminal Value
= CN¥151,840.65 + CN¥276,084.97
CN¥427,925.61
Equity Value per Share
(CNY)
= Total value / Shares Outstanding
= CN¥427,925.61 / 127.96
CN¥3344.2
NasdaqGS:NTES Discount to Share Price
Calculation Result
Exchange Rate CNY/USD
(Reporting currency to currency of NasdaqGS:NTES)
0.142
Value per Share
(USD)
= Value per Share in CNY x Exchange Rate (CNY/USD)
= CN¥3344.2 x 0.142
$474.87
Value per share (USD) From above. $474.87
Current discount Discount to share price of $258.48
= -1 x ($258.48 - $474.87) / $474.87
45.6%

Learn more about our DCF calculations in Simply Wall St’s analysis model .

Current Discount
Amount off the current price NetEase is available for.
Intrinsic value
46%
Share price is $258.48 vs Future cash flow value of $474.87
Current Discount Checks
For NetEase to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • NetEase's share price is below the future cash flow value, and at a moderate discount (> 20%).
  • NetEase's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for NetEase's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are NetEase's earnings available for a low price, and how does this compare to other companies in the same industry?
Raw Data
NasdaqGS:NTES PE (Price to Earnings) Ratio Data Sources
Data Point Source Value
Earnings Per Share * Company Filings (2019-06-30) in CNY CN¥68.15
NasdaqGS:NTES Share Price ** NasdaqGS (2019-08-16) in USD $258.48
NasdaqGS:NTES Share Price converted to CNY reporting currency Exchange rate (USD/ CNY) 7.042 CN¥1820.32
United States of America Entertainment Industry PE Ratio Median Figure of 29 Publicly-Listed Entertainment Companies 41.46x
United States of America Market PE Ratio Median Figure of 3,093 Publicly-Listed Companies 17.02x

* Trailing twelve months (TTM) annual GAAP earnings per share excluding extraordinary items.

** Primary Listing of NetEase.

NasdaqGS:NTES PE (Price to Earnings) Ratio Calculation
Calculation Outcome
PE Ratio

= NasdaqGS:NTES Share Price ÷ EPS (both in CNY)

= 1820.32 ÷ 68.15

26.71x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • NetEase is good value based on earnings compared to the US Entertainment industry average.
  • NetEase is overvalued based on earnings compared to the United States of America market.
Price based on expected Growth
Does NetEase's expected growth come at a high price?
Raw Data
NasdaqGS:NTES PEG (Price to Earnings to Growth) Ratio Data Sources
Data Point Source Value
PE Ratio See PE Ratio Section 26.71x
Net Income Annual Growth Rate See Future Growth Section.
Line of Best Fit* through Consensus Estimate Earnings of 27 Analysts
11.1%per year
United States of America Entertainment Industry PEG Ratio Median Figure of 22 Publicly-Listed Entertainment Companies 2.21x
United States of America Market PEG Ratio Median Figure of 2,115 Publicly-Listed Companies 1.38x

*Line of best fit is calculated by linear regression .

NasdaqGS:NTES PEG (Price to Earnings to Growth) Ratio Calculation
Calculation Outcome
PEG Ratio

= PE Ratio ÷ Net Income Annual Growth Rate

= 26.71x ÷ 11.1%

2.41x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • NetEase is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on NetEase's assets?
Raw Data
NasdaqGS:NTES PB (Price to Book) Ratio Data Sources
Data Point Source Value
Book Value per Share Company Filings (2019-06-30) in CNY CN¥395.42
NasdaqGS:NTES Share Price * NasdaqGS (2019-08-16) in USD $258.48
NasdaqGS:NTES Share Price converted to CNY reporting currency Exchange rate (USD/ CNY) 7.042 CN¥1820.32
United States of America Entertainment Industry PB Ratio Median Figure of 66 Publicly-Listed Entertainment Companies 2.94x
United States of America Market PB Ratio Median Figure of 5,261 Publicly-Listed Companies 1.67x
NasdaqGS:NTES PB (Price to Book) Ratio Calculation
Calculation Outcome
PB Ratio

= NasdaqGS:NTES Share Price ÷ Book Value per Share (both in CNY)

= 1820.32 ÷ 395.42

4.6x

* Primary Listing of NetEase.

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • NetEase is overvalued based on assets compared to the US Entertainment industry average.
X
Value checks
We assess NetEase's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Entertainment industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Entertainment industry average (and greater than 0)? (1 check)
  5. NetEase has a total score of 3/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.

    Full details on the Value part of the Simply Wall St company analysis model.

Future Performance

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

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
11.1%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is NetEase expected to grow at an attractive rate?
  • NetEase's earnings growth is expected to exceed the low risk savings rate of 2.7%.
Growth vs Market Checks
  • NetEase's earnings growth is positive but not above the United States of America market average.
  • NetEase's revenue growth is expected to exceed the United States of America market average.
Annual Growth Rates Comparison
Raw Data
NasdaqGS:NTES Future Growth Rates Data Sources
Data Point Source Value (per year)
NasdaqGS:NTES Future Earnings Growth Rate Line of Best Fit* through Consensus Estimate Earnings of 27 Analysts 11.1%
NasdaqGS:NTES Future Revenue Growth Rate Line of Best Fit* through Consensus Estimate Revenue of 27 Analysts 12.3%
United States of America Entertainment Industry Earnings Growth Rate Market Cap Weighted Average 13.4%
United States of America Entertainment Industry Revenue Growth Rate Market Cap Weighted Average 11.6%
United States of America Market Earnings Growth Rate Market Cap Weighted Average 14%
United States of America Market Revenue Growth Rate Market Cap Weighted Average 7.4%

*Line of best fit is calculated by linear regression .

Industry and Market average data is calculated daily.

Learn more about our growth rate calculations in Simply Wall St’s analysis model.

Analysts growth expectations
Raw Data
NasdaqGS:NTES Analysts Growth Expectations Data Sources
Data Point Source Value
Past Financials Company Filings (1 month ago) See Below
Future Estimates Average of up to 27 Analyst Estimates (S&P Global) See Below
All numbers in CNY Millions and using Trailing twelve months (TTM) annual period rather than quarterly.
NasdaqGS:NTES Future Estimates Data
Date (Data in CNY Millions) Revenue Cash Flow Net Income * Avg. No. Analysts
2023-12-31 131,985 1
2022-12-31 117,650 15,892 2
2021-12-31 101,364 16,461 11,555 23
2020-12-31 89,978 14,977 9,988 27
2019-12-31 78,089 13,678 9,404 22
NasdaqGS:NTES Past Financials Data
Date (Data in CNY Millions) Revenue Cash Flow Net Income *
2019-06-30 73,825 17,405 8,747
2019-03-31 71,340 14,897 7,783
2018-12-31 67,156 13,416 6,152
2018-09-30 61,920 11,362 5,740
2018-06-30 57,542 9,400 6,671
2018-03-31 54,634 9,763 7,537
2017-12-31 54,102 11,889 10,708
2017-09-30 51,593 13,387 13,105
2017-06-30 48,327 15,461 13,318
2017-03-31 43,904 16,427 13,066
2016-12-31 38,179 15,488 11,605
2016-09-30 33,983 13,223 10,086

*GAAP earnings excluding extraordinary items.

Super high growth metrics
High Growth Checks
  • NetEase's earnings are expected to grow by 11.1% yearly, however this is not considered high growth (20% yearly).
  • NetEase's revenue is expected to grow by 12.3% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Raw Data
NasdaqGS:NTES Past and Future Earnings per Share
Data Point Source Value
Past Financials Company Filings (1 month ago) See Below
Future Estimates Average of up to 27 Analyst Estimates (S&P Global) See Below

All data from NetEase Company Filings, last reported 1 month ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

NasdaqGS:NTES Future Estimates Data
Date (Data in CNY Millions) EPS * EPS High Estimate EPS Low Estimate Avg. No. Analysts
2023-12-31
2022-12-31 121.76 121.76 121.76 1.00
2021-12-31 90.44 112.04 60.05 18.00
2020-12-31 79.05 93.34 50.50 19.00
2019-12-31 73.40 78.68 67.52 14.00
NasdaqGS:NTES Past Financials Data
Date (Data in CNY Millions) EPS *
2019-06-30 68.15
2019-03-31 60.49
2018-12-31 47.54
2018-09-30 44.06
2018-06-30 50.89
2018-03-31 57.29
2017-12-31 81.36
2017-09-30 99.60
2017-06-30 101.34
2017-03-31 99.56
2016-12-31 88.40
2016-09-30 76.80

*GAAP earnings excluding extraordinary items.

Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • NetEase is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
X
Future performance checks
We assess NetEase's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the United States of America market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the United States of America market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
NetEase has a total score of 2/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has NetEase performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare NetEase's growth in the last year to its industry (Entertainment).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • NetEase's year on year earnings growth rate has been positive over the past 5 years.
  • NetEase's 1-year earnings growth exceeds its 5-year average (31.1% vs 9.5%)
  • NetEase's earnings growth has not exceeded the US Entertainment industry average in the past year (31.1% vs 31.1%).
Earnings and Revenue History
NetEase's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Raw Data

All data from NetEase Company Filings, last reported 1 month ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

NasdaqGS:NTES Past Revenue, Cash Flow and Net Income Data
Date (Data in CNY Millions) Revenue Net Income * G+A Expenses R&D Expenses
2019-06-30 73,824.73 8,747.48 11,529.04 8,644.55
2019-03-31 71,339.62 7,782.63 11,945.83 8,499.73
2018-12-31 67,156.45 6,152.41 12,718.01 7,792.55
2018-09-30 61,919.81 5,740.32 12,536.67 6,879.35
2018-06-30 57,542.30 6,671.48 11,602.31 5,771.53
2018-03-31 54,634.46 7,537.07 10,888.26 4,905.58
2017-12-31 54,102.02 10,707.94 9,387.45 4,371.43
2017-09-30 51,593.40 13,105.43 8,031.35 4,006.33
2017-06-30 48,327.26 13,318.00 7,453.13 3,673.64
2017-03-31 43,904.03 13,066.49 6,679.29 3,348.42
2016-12-31 38,178.84 11,604.52 5,987.97 3,046.98
2016-09-30 33,982.78 10,085.88 5,483.40 2,756.62
2016-06-30 31,442.92 9,227.77 4,954.33 2,559.89
2016-03-31 27,058.00 7,931.48 4,346.54 2,330.42
2015-12-31 22,802.90 6,735.11 3,972.62 2,158.89
2015-09-30 18,362.93 5,841.91 3,605.77 1,963.72
2015-06-30 14,807.88 5,119.16 3,130.89 1,736.64
2015-03-31 13,007.57 4,897.19 2,764.02 1,531.97
2014-12-31 11,712.83 4,756.62 2,362.67 1,323.50
2014-09-30 10,672.26 4,722.38 1,924.93 1,169.87
2014-06-30 9,912.16 4,611.53 1,639.98 1,030.77
2014-03-31 9,409.10 4,504.28 1,510.83 962.25
2013-12-31 9,196.18 4,443.91 1,443.44 921.62
2013-09-30 9,044.63 4,215.42 1,424.16 873.00
2013-06-30 8,689.95 3,979.06 1,382.14 817.32
2013-03-31 8,387.92 3,759.26 1,245.05 766.08
2012-12-31 8,200.96 3,637.45 1,192.93 718.32
2012-09-30 8,029.27 3,527.54 1,138.05 671.48

*GAAP earnings excluding extraordinary items.

Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • NetEase has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
  • NetEase used its assets more efficiently than the US Entertainment industry average last year based on Return on Assets.
  • NetEase's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).
X
Past performance checks
We assess NetEase's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Entertainment industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
NetEase has a total score of 3/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is NetEase's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up NetEase's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • NetEase is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • NetEase's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of NetEase's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Debt is covered by short term assets, assets are 5.4x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
Raw Data

All data from NetEase Company Filings, last reported 1 month ago.

NasdaqGS:NTES Past Debt and Equity Data
Date (Data in CNY Millions) Total Equity Total Debt Cash & Short Term Investments
2019-06-30 57,490.61 13,553.81 55,551.58
2019-03-31 54,106.31 14,134.55 51,803.12
2018-12-31 51,411.58 13,658.55 50,088.26
2018-09-30 46,238.94 13,645.93 42,436.61
2018-06-30 45,188.22 12,725.74 44,127.91
2018-03-31 45,474.73 9,516.16 43,337.67
2017-12-31 47,049.84 6,623.50 43,248.81
2017-09-30 46,284.01 5,732.59 40,679.80
2017-06-30 44,732.12 5,377.69 41,140.48
2017-03-31 42,480.23 4,483.44 40,143.10
2016-12-31 38,462.94 3,815.69 36,538.73
2016-09-30 35,246.54 3,005.01 30,859.95
2016-06-30 32,910.82 2,320.92 28,188.00
2016-03-31 31,148.35 2,261.42 27,019.77
2015-12-31 29,323.60 2,272.76 25,713.17
2015-09-30 27,243.13 2,226.46 24,309.03
2015-06-30 25,898.60 2,139.76 22,906.48
2015-03-31 24,749.47 1,228.34 23,730.27
2014-12-31 23,491.79 2,049.87 22,576.58
2014-09-30 22,290.51 2,061.09 21,420.20
2014-06-30 21,350.46 2,061.19 20,559.04
2014-03-31 20,329.49 1,784.11 19,822.30
2013-12-31 20,168.26 975.50 18,984.95
2013-09-30 18,888.58 983.68 17,727.43
2013-06-30 17,809.71 988.59 17,295.98
2013-03-31 16,683.45 1,003.02 16,299.47
2012-12-31 15,601.49 0.00 15,762.97
2012-09-30 15,811.09 0.00 14,935.88
  • NetEase's level of debt (23.6%) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (9.6% vs 23.6% today).
  • Debt is well covered by operating cash flow (128.4%, greater than 20% of total debt).
  • NetEase earns more interest than it pays, coverage of interest payments is not a concern.
X
Financial health checks
We assess NetEase's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by operating cash flow? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. NetEase has a total score of 5/6, see the detailed checks below.
For companies that are loss making and have been so on average in the past we replace the last 2 checks with:
  1. Does cash and short term investments cover stable operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)
  2. Does cash and short term investments cover growing operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

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

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0.65%
Current annual income from NetEase dividends. Estimated to be 1.09% next year.
If you bought $2,000 of NetEase shares you are expected to receive $13 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • NetEase's pays a lower dividend yield than the bottom 25% of dividend payers in United States of America (1.5%).
  • NetEase's dividend is below the markets top 25% of dividend payers in United States of America (3.9%).
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
Raw Data
NasdaqGS:NTES Annualized Past and Future Dividends
Data Point Source Value
Past Annualized Dividend Yield S&P Global Market Data See Below
Past Dividends per Share Company Filings/ Annualized Dividend Payments See Below
Future Dividends per Share Estimates Average of up to 27 Analyst Estimates (S&P Global) See Below
United States of America Entertainment Industry Average Dividend Yield Market Cap Weighted Average of 11 Stocks 1.3%
United States of America Market Average Dividend Yield Market Cap Weighted Average of 2009 Stocks 2.5%
United States of America Minimum Threshold Dividend Yield 10th Percentile 0.8%
United States of America Bottom 25% Dividend Yield 25th Percentile 1.5%
United States of America Top 25% Dividend Yield 75th Percentile 3.9%

Industry and Market average data is calculated daily.

Note all dividend per share amounts are annualized and not quarterly or other period.

NasdaqGS:NTES Future Dividends Estimate Data
Date (Data in CN¥) Dividend per Share (annual) Avg. No. Analysts
2023-12-31
2022-12-31 30.01 1.00
2021-12-31 21.80 16.00
2020-12-31 19.11 18.00
2019-12-31 18.19 17.00
NasdaqGS:NTES Past Annualized Dividends Data
Date (Data in CN¥) Dividend per share (annual) Avg. Yield (%)
2019-04-26 11.909 0.695
2019-02-20 11.828 0.720
2018-04-20 18.951 1.290
2018-02-07 18.859 1.022
2017-05-11 27.066 1.434
2017-04-21 27.812 1.498
2017-02-15 27.695 1.421
2016-11-09 21.144 1.333
2016-08-18 20.679 1.301
2016-05-12 19.025 1.601
2016-02-25 13.102 1.442
2015-11-11 14.263 1.388
2015-04-24 9.043 1.097
2015-02-09 8.953 1.364
2014-08-13 9.044 1.552
2014-05-14 8.368 1.766
2014-02-14 8.554 2.056

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • NetEase is not paying a notable dividend for United States of America, therefore no need to check if the payments are stable.
  • NetEase is not paying a notable dividend for United States of America, therefore no need to check if the payments are increasing.
Current Payout to shareholders
What portion of NetEase's earnings are paid to the shareholders as a dividend.
  • No need to calculate the sustainability of NetEase's dividends as it is not paying a notable one for United States of America.
Future Payout to shareholders
  • Dividends after 3 years are expected to be well covered by earnings (5x coverage).
X
Income/ dividend checks
We assess NetEase's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.8%) - if not then the rest of the checks are ignored.
  2. Is current dividend yield above the bottom 25% of dividend payers? (1 check)
  3. Is current dividend yield above the top 25% of dividend payers? (1 check)
  4. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  5. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  6. How sustainable is the dividend, can NetEase afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  7. NetEase has a total score of 1/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of NetEase's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
William Ding
COMPENSATION CN¥0
AGE 47
TENURE AS CEO 13.8 years
CEO Bio

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 established NetEase and Guangzhou Netease in May 1997 and has been a major force in the development of the Internet in China. He served as the Chief Architect of NetEase.com, Inc. from March 2001 to November 2005. Mr. Ding served as Acting Chief Executive Officer and Chief Operating Officer of Netease Com Inc. from June 2001 to September 2001. He served as the Co-Chief Technology Officer from July 1999 to March 2001 and Interim Chief Executive Officer of NetEase.com, Inc. from July 1999 to April 2000. During NetEase's initial two years of operation, he focused on Internet application systems. In November 1997, he introduced China's first dual language free email service to users, which was a decisive factor in the prevalence and growth of China's Internet industry. He has accumulated rich and varied experience in his professional life in the Internet world. Mr. Ding spent one year at Guangzhou Feijie Co. as a systems analyst, from June 1996 to April 1997, one year at Sybase (China) as a project manager/technical support engineer from May 1995 to May 1996 and two years at China Telecom Ningbo Branch as a technical engineer from June 1993 to May 1995. He served as the Chairman of the Board of Directors at NetEase.com, Inc. until September 2001. Mr. Ding has been a Director of NetEase, Inc. since July 1999. Mr. Ding holds a Bachelor of Science degree in Communication Technology from the University of Electronic Science and Technology of China.

CEO Compensation
  • Insufficient data for William to compare compensation growth.
  • Insufficient data for William to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.
Management Team Tenure

Average tenure and age of the NetEase management team in years:

12
Average Tenure
47
Average Age
  • The average tenure for the NetEase management team is over 5 years, this suggests they are a seasoned and experienced team.
Management Team

William Ding

TITLE
Founder
AGE
47
TENURE
13.8 yrs

Onward Choi

TITLE
Consultant
AGE
48

Charles Yang

TITLE
Chief Financial Officer
AGE
36
TENURE
2.2 yrs

Margaret Shi

TITLE
IR Director

Feng Zhou

TITLE
Senior Vice President of Search Operations
TENURE
12 yrs
Board of Directors Tenure

Average tenure and age of the NetEase board of directors in years:

17.1
Average Tenure
56
Average Age
  • The average tenure for the NetEase board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Board of Directors

Michael Leung

TITLE
Director
COMPENSATION
CN¥54K
AGE
65
TENURE
17.1 yrs

William Ding

TITLE
Founder
AGE
47
TENURE
20.1 yrs

Denny Lee

TITLE
Director
COMPENSATION
CN¥12K
AGE
52
TENURE
17.3 yrs

Michael Tong

TITLE
Director
AGE
48
TENURE
19.7 yrs

Joseph Tong

TITLE
Director
COMPENSATION
CN¥54K
AGE
56
TENURE
16.4 yrs

Lun Feng

TITLE
Director
COMPENSATION
CN¥14K
AGE
60
TENURE
14.1 yrs

Alice Cheng

TITLE
Independent Non-Executive Director
COMPENSATION
CN¥67K
AGE
58
TENURE
12.2 yrs
Who owns this company?
Recent Insider Trading
  • No 3 month open market individual insider trading information.
Recent Insider Transactions
Announced Type Name Entity Role Start End Shares Max Price ($) Value ($)
X
Management checks
We assess NetEase's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. NetEase has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

News

Simply Wall St News

Is NetEase, Inc. (NASDAQ:NTES) Trading At A 50% Discount?

A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 10-year free cash flow (FCF) forecast 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Levered FCF (CN¥, Millions) CN¥11.8b CN¥13.7b CN¥19.2b CN¥22.5b CN¥25.4b CN¥27.9b CN¥30.1b CN¥32.0b CN¥33.6b CN¥35.1b Growth Rate Estimate Source Analyst x9 Analyst x8 Analyst x1 Est @ 17.27% Est @ 12.91% Est @ 9.85% Est @ 7.72% Est @ 6.22% Est @ 5.17% Est @ 4.44% Present Value (CN¥, Millions) Discounted @ 8.42% CN¥10.9k CN¥11.7k CN¥15.1k CN¥16.3k CN¥17.0k CN¥17.2k CN¥17.1k CN¥16.7k CN¥16.2k CN¥15.6k ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF)= CN¥153.8b The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … Terminal Value (TV) = FCF2029 × (1 + g) ÷ (r – g) = CN¥35b × (1 + 2.7%) ÷ (8.4% – 2.7%) = CN¥634b Present Value of Terminal Value (PVTV) = TV / (1 + r)10 = CN¥CN¥634b ÷ ( 1 + 8.4%)10 = CN¥282.19b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is CN¥436.04b. … NasdaqGS:NTES Intrinsic value, August 12th 2019 The assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.

Simply Wall St -

Why NetEase, Inc. (NASDAQ:NTES) Could Be Worth Watching

Let’s take a look at NetEase’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. … And if you believe NetEase should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. … In addition to this, it seems like NetEase’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued.

Simply Wall St -

Announcing: NetEase (NASDAQ:NTES) Stock Increased An Energizing 205% In The Last Five Years

Over half a decade, NetEase managed to grow its earnings per share at 12% a year. … When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. … So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return.

Simply Wall St -

NetEase, Inc. (NASDAQ:NTES) Is Employing Capital Very Effectively

Analysts use this formula to calculate return on capital employed: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) Or for NetEase: 0.18 = CN¥10b ÷ (CN¥91b - CN¥36b) (Based on the trailing twelve months to March 2019.) So, NetEase has an ROCE of 18%. … The ROCE equation subtracts current liabilities from capital employed, so a company with a lot of current liabilities appears to have less capital employed, and a higher ROCE than otherwise. … Our Take On NetEase's ROCE With a decent ROCE, the company could be interesting, but remember that the level of current liabilities make the ROCE look better.

Simply Wall St -

NetEase, Inc. (NASDAQ:NTES): Has Recent Earnings Growth Beaten Long-Term Trend?

Below, I will assess NetEase, Inc.'s (NASDAQ:NTES) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. … Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? … I recommend you continue to research NetEase to get a better picture of the stock by looking at: Future Outlook: What are well-informed industry analysts predicting for NTES’s future growth?

Simply Wall St -

Calculating The Fair Value Of NetEase, Inc. (NASDAQ:NTES)

Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 10-year free cash flow (FCF) forecast 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Levered FCF (CN¥, Millions) CN¥7.68k CN¥10.52k CN¥12.36k CN¥13.59k CN¥14.66k CN¥15.58k CN¥16.39k CN¥17.13k CN¥17.81k CN¥18.44k Growth Rate Estimate Source Analyst x6 Analyst x7 Analyst x4 Est @ 10.01% Est @ 7.83% Est @ 6.3% Est @ 5.23% Est @ 4.48% Est @ 3.95% Est @ 3.59% Present Value (CN¥, Millions) Discounted @ 8.66% CN¥7.07k CN¥8.91k CN¥9.63k CN¥9.75k CN¥9.68k CN¥9.47k CN¥9.17k CN¥8.81k CN¥8.43k CN¥8.04k Present Value of 10-year Cash Flow (PVCF)= CN¥88.95b "Est" = FCF growth rate estimated by Simply Wall St The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … Terminal Value (TV) = FCF2029 × (1 + g) ÷ (r – g) = CN¥18b × (1 + 2.7%) ÷ (8.7% – 2.7%) = CN¥320b Present Value of Terminal Value (PVTV) = TV / (1 + r)10 = CN¥CN¥320b ÷ ( 1 + 8.7%)10 = CN¥139.26b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is CN¥228.22b. … NasdaqGS:NTES Intrinsic value, May 14th 2019 Important assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.

Simply Wall St -

A Note On NetEase, Inc.'s (NASDAQ:NTES) ROE and Debt To Equity

While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. … Our data shows NetEase has a return on equity of 13% for the last year. … Return on Equity = Net Profit ÷ Shareholders' Equity

Simply Wall St -

Is NetEase, Inc. (NASDAQ:NTES) Undervalued After Accounting For Its Future Growth?

(NASDAQ:NTES) is considered a high growth stock. … However its last closing price of $270.54 left investors wondering whether this growth has already been factored into the share price. … Analysts are predicting good growth prospects for NetEase over the next couple of years

Simply Wall St -

Can You Imagine How Chuffed NetEase's (NASDAQ:NTES) Shareholders Feel About Its 275% Share Price Gain?

And in the last month, the share price has gained 3.9%. … One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. … This EPS growth is slower than the share price growth of 30% per year, over the same period.

Simply Wall St -

NetEase, Inc. (NASDAQ:NTES): What's The Analyst Consensus Outlook?

NetEase, Inc.'s (NASDAQ:NTES) most recent earnings announcement in December 2018a … showed … business

Simply Wall St -

Company Info

Description

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.

Details
Name: NetEase, Inc.
NTES
Exchange: NasdaqGS
Founded: 1997
$33,075,286,905
127,960,720
Website: http://ir.netease.com
Address: NetEase, Inc.
Building No. 7, West Zone,
Zhongguancun Software Park (Phase II),
Beijing,
100193,
China
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS NTES ADR EACH REPR 25 COM STK USD0.0001 Nasdaq Global Select US USD 30. Jun 2000
DB NEH ADR EACH REPR 25 COM STK USD0.0001 Deutsche Boerse AG DE EUR 30. Jun 2000
LSE 0K6G ADR EACH REPR 25 COM STK USD0.0001 London Stock Exchange GB USD 30. Jun 2000
SWX NTES ADR EACH REPR 25 COM STK USD0.0001 SIX Swiss Exchange CH CHF 30. Jun 2000
WBAG NTES ADR EACH REPR 25 COM STK USD0.0001 Wiener Boerse AG AT EUR 30. Jun 2000
BMV NTES N ADR EACH REPR 25 COM STK USD0.0001 Bolsa Mexicana de Valores MX MXN 30. Jun 2000
Number of employees
Current staff
Staff numbers
23,687
NetEase employees.
Industry
Interactive Home Entertainment
Media
Company Analysis and Financial Data Status
Area Date (UTC time)
Company Analysis updated: 2019/08/16 23:42
End of day share price update: 2019/08/16 00:00
Last estimates confirmation: 2019/08/11
Last earnings filing: 2019/08/08
Last earnings reported: 2019/06/30
Last annual earnings reported: 2018/12/31


All dates and times in UTC. All financial data provided by Standard & Poor’s Capital IQ.

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.