The Zhitong Finance App learned that Daiwa released a research report saying that NetEase's (09999) game gross margin has reached a high level, and there is limited room for further improvement. However, operating leverage continues to be reflected, raising the 2026-2028 revenue forecast by 0.9% to 1.3%, and increasing the 2027-2028 earnings forecast by 1% to 2% per share. The target price was raised from HK$257 to HK$260, maintaining a “buy” rating.

The bank believes that NetEase's second-quarter results were better than expected. Revenue and adjusted EBIT were 3% and 15% higher than market expectations, respectively. Online game revenue increased 10% year over year, and gross margin reached 76.1% year on year, up 5.9 percentage points year on year, which was the biggest surprise.

According to Yamato, the “Eternity” mobile game had mixed initial reactions after its launch in July. However, management has improved the player experience through high-frequency content updates and is confident in long-term development, while existing Evergreen games such as “Journey to the West” and “Eggboy Party” are still strong, and summer updates and new gameplay help drive players' activity.

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