"Forecast" Securities expect NetEase's adjusted net profit in the third quarter to rise by 26%, focusing on game operations and AI application guidance

AASTOCKS
2025.11.20 03:44

NetEase-S (09999.HK) will announce its third-quarter results for this year after the market closes today (20th). Benefiting from the strong momentum of the new servers for "Nirvana in Fire" on PC, the steady performance of "Nirvana in Fire" mobile game and "Yanyun Shiliusheng", as well as the good momentum of "Hearthstone" under seasonal warming, our website has compiled predictions from 11 brokerages that NetEase's non-GAAP net profit for the third quarter of 2025 is expected to be between RMB 9.299 billion and RMB 9.809 billion, compared to RMB 7.5 billion in the same period last year, an annual increase of 24% to 30.8%, with a median of RMB 9.45 billion, an annual increase of 26%.

According to predictions from 5 brokerages, NetEase's net profit for the third quarter of 2025 is expected to be between RMB 8.495 billion and RMB 8.807 billion, compared to RMB 7.5 billion in the same period last year, an annual increase of 30% to 34.7%. The median is RMB 8.564 billion, an annual increase of 31%. According to predictions from 10 brokerages, NetEase's revenue for the third quarter of 2025 is expected to be between RMB 28.6 billion and RMB 29.77 billion, compared to RMB 26.21 billion in the same period last year, an annual increase of 9.1% to 13.6%, with a median of RMB 29.24 billion, an annual increase of 11.6%.

Investors will focus on the latest operational guidance from NetEase's management, including the performance of "Nirvana in Fire" on PC and mobile, Blizzard games performance, including "StarCraft", "Diablo", "Hearthstone", and "World of Warcraft", updates on the release progress of "Ananta", as well as the number of subscriptions for NetEase Cloud Music and the competitive landscape, and pay attention to the benefits of AI in game development.

【Strong Gaming Business Focused on New Guidance】

Morgan Stanley expects NetEase's total revenue for the third quarter of this year to be RMB 29.368 billion, an annual increase of 12% (up 5% quarter-on-quarter), of which online gaming revenue is RMB 23.245 billion, an annual increase of 15% (up 5% quarter-on-quarter), Youdao business revenue is RMB 1.649 billion, an annual increase of 5% (up 16% quarter-on-quarter), NetEase Cloud Music business revenue is RMB 2.099 billion, an annual increase of 5% (up 7% quarter-on-quarter), and net income from innovation and other businesses is RMB 2.375 billion, an annual decrease of 3% (up 1% quarter-on-quarter). The firm expects NetEase's gross profit for the third quarter to be RMB 18.798 billion, an annual increase of 14% (up 5% quarter-on-quarter), with a gross margin of 64%, an annual increase of 1.1 percentage points (down 0.7 percentage points quarter-on-quarter). The firm expects NetEase's non-GAAP net profit for the third quarter of 2025 to be RMB 9.433 billion, an annual increase of 25.8% (down 1% quarter-on-quarter).

UBS expects NetEase's non-GAAP net profit for the third quarter of 2025 to be RMB 9.447 billion, an annual increase of 26%, and expects the third quarter net profit to be RMB 8.507 billion, an annual growth of 30.1%, with a non-GAAP net profit margin of 32.2% (an annual increase of 26%), and expects revenue to increase by 12% year-on-year to RMB 29.378 billion (up 5.3% quarter-on-quarter), of which online gaming revenue is RMB 23.589 billion, an annual increase of 16.8%, and related value-added business revenue is RMB 642 million, an annual decrease of 3.9% Goldman Sachs expects NetEase's non-GAAP EBIT for the third quarter of this year to reach RMB 10.005 billion, a year-on-year increase of 23%. Among them, the online gaming business is expected to record an EBIT of RMB 9.68 billion, a year-on-year increase of 20%. It is estimated that NetEase Cloud Music's EBIT will reach RMB 492 million, a year-on-year increase of 90%, while the innovation and other businesses are expected to record a loss of RMB 255 million.

In addition, JP Morgan reported in mid-last month that NetEase's H shares accounted for 54%, 56%, and 61% of its total trading volume over the past 12 months, year-to-date, and the last 3 months, respectively. If this trend continues, the bank believes that NetEase is likely to transition to a dual primary listing on NASDAQ and the Hong Kong Stock Exchange. Once it becomes a primary listing in Hong Kong, it will be eligible for inclusion in the Stock Connect, which is expected to be a catalyst for valuation increase.

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According to a comprehensive forecast from 11 brokerages, NetEase's non-GAAP net profit for the third quarter of 2025 is expected to be between RMB 9.299 billion and RMB 9.809 billion, compared to RMB 7.5 billion in the same period last year, representing a year-on-year increase of 24% to 30.8%, with a median of RMB 9.45 billion, a year-on-year increase of 26%.

Brokerage│2025 Q3 Non-GAAP Net Profit Forecast (RMB)│Year-on-Year Change

JP Morgan│RMB 9.809 billion│+30.8%

Haitong International│RMB 9.664 billion│+28.9%

Bank of China International│RMB 9.653 billion│+28.7%

CICC│RMB 9.6 billion│+28%

Citi│RMB 9.553 billion│+27.4%

Citi│RMB 9.45 billion│+26%

UBS│RMB 9.447 billion│+26%

Morgan Stanley│RMB 9.433 billion│+25.8%

Goldman Sachs│RMB 9.405 billion│+25.4%

Nomura│RMB 9.317 billion│+24.2%

Barclays│RMB 9.299 billion│+24%

Based on NetEase's fiscal year 2024 third quarter non-GAAP net profit of RMB 7.5 billion.

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A comprehensive forecast from 5 brokerages indicates that NetEase's net profit for the third quarter of 2025 is expected to be between RMB 8.495 billion and RMB 8.807 billion, compared to RMB 7.5 billion in the same period last year, representing a year-on-year increase of 30% to 34.7%. The median is RMB 8.564 billion, a year-on-year increase of 31%.

Brokerage│2025 Q3 Net Profit Forecast (RMB)│Year-on-Year Change

JP Morgan│RMB 8.807 billion│+34.7%

Haitong International│RMB 8.729 billion│+33.5% Citigroup | CNY 8.564 billion | +31%

UBS | CNY 8.507 billion | +30.1%

Citi | CNY 8.495 billion | +30%

Based on NetEase's net profit of CNY 6.538 billion for the third quarter of the 2024 fiscal year.

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According to the forecasts of 10 brokerages, NetEase's revenue for the third quarter of 2025 is expected to be between CNY 28.6 billion and CNY 29.77 billion, compared to CNY 26.21 billion in the same period last year, an annual increase of 9.1% to 13.6%, with a median of CNY 29.24 billion, an annual increase of 11.6%.

Brokerage | 2025 Q3 Non-GAAP Revenue Forecast (CNY) | Year-on-Year Change

Goldman Sachs | CNY 29.77 billion | +13.6%

BOC International | CNY 29.553 billion | +12.8%

Citi | CNY 29.407 billion | +12.2%

UBS | CNY 29.378 billion | +12%

Morgan Stanley | CNY 29.368 billion | +12%

Barclays | CNY 29.111 billion | +11.1%

JP Morgan | CNY 29.068 billion | +10.9%

Citigroup | CNY 28.91 billion | +10.3%

Haitong International | CNY 28.643 billion | +9.3%

Nomura | CNY 28.6 billion | +9.1%

Based on NetEase's non-GAAP revenue of CNY 26.21 billion for the third quarter of the 2024 fiscal year

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