Why did Vectorial Data pick NTES?

Three reasons. (1) THE GAMES BUSINESS KEEPS GROWING AND IS HIGHLY PROFITABLE: in the April–June quarter (reported August 20, 2026) games brought in RMB 25.0 billion (+9.7%), the company-wide gross margin rose to 70.4% and operating profit jumped to RMB 12.1 billion from RMB 9.1 billion a year earlier (+33%). It has games that last decades (Fantasy Westward Journey) and new global hits: after the quarter Marvel Rivals reached #2 on Steam's global top sellers chart and Where Winds Meet hit a record of monthly active players in China. (2) CHEAP AND CASH-RICH: at $118.75 it costs ~15.8 times the profit of the last 12 months and ~11 times what analysts expect; it holds RMB 167.5 billion (~$24.7 billion) in net cash — almost a third of its ~$76 billion market value — and a share buyback program of up to $5 billion running through January 2029 (in the quarter it bought back 2.8 million ADRs for $324.1 million). (3) THE DROP COMES FROM OUTSIDE THE BUSINESS: net profit fell to RMB 7.0 billion (from RMB 8.6 billion) because shares of other companies NetEase invests in lost value and because the tax rate rose to 25.5% (from 14.7%) — not because people stopped playing. The stock ended up 24% below its 52-week high ($156.44). Wall Street sees it that way: 25 analysts at Strong Buy, 6 at Buy and 1 at Hold, with an average target of $162.10 (+36.5%) — and even the lowest target ($132.36) is 11% above the purchase price.

What are the risks of investing in NTES?

#1: it's a Chinese company and the Chinese government rules over video games. Beijing decides which games can launch, how much minors can play and how in-game purchases work; in addition, NetEase is a Cayman Islands company that controls part of its Chinese operations through contracts (VIE), not as a direct owner — a structure its own annual report flags as a risk. Others: (2) profit is heading down this year: net profit for the quarter fell 19% and adjusted earnings per ADR were $1.77 versus the $2.28 analysts expected; the stock dropped ~4.5% that day; (3) it depends on hits: the company itself admits its pipeline of new games is "relatively lean", Sea of Remnants (July 2026) launched to criticism for being hard to learn and Ananta still has no date; (4) the dividend changes every quarter: it paid $1.16 per ADR for Q4 2025, $0.72 for Q1 2026 and $0.48 for Q2 (versus $0.57 a year earlier, −16%) — it is not a dividend that rises every year; (5) taxes: the Cayman Islands withhold nothing and NetEase says it does not consider itself a Chinese resident enterprise, but if Chinese authorities decided otherwise, 10% of dividends to foreign investors could be withheld; the ADR depositary also deducts a small fee; (6) currency: it earns in yuan and pays in dollars; (7) businesses outside games are not growing: music flat, innovative businesses −3.5%.

Does NTES pay dividends?

Yes. NetEase, Inc. pays a dividend of about 2.47% per year.

How can I buy NTES with little money?

You can buy fractional shares of NTES starting from a few dollars with any broker that offers fractional shares. The Vectorial Data method: invest the same amount in every pick, every time.

When was this NTES analysis last updated?

The NTES analysis was last updated on Invalid Date.

Stocks/NTES

NTES — NetEase, Inc.

Communication ServicesAsiaChinaBlockchain certified

$118.75

Target: $162.10 (+36.5%)

P/E Ratio

15.8

P/E Forward

11.0

Dividend

2.47%

Market Cap

$76B

EPS

$7.52

Consensus

Strong Buy

What they do

NetEase, Inc. (Nasdaq: NTES since 2000; Hong Kong Stock Exchange: 9999 since 2020) was founded in June 1997 by Ding Lei — William Ding —, who remains its Chief Executive Officer and a director. It operates from Hangzhou, Zhejiang province, with offices in Beijing, Guangzhou and Shanghai, studios in Japan, Korea, the United States, Canada and the United Kingdom, and ~25,400 full-time employees. Legally it is a Cayman Islands company that operates in China through subsidiaries and through contracts with Chinese entities (the so-called VIEs), a common structure among Chinese tech companies listed in the US.

Four businesses, with April–June 2026 quarter figures: Games RMB 25.0 billion (+9.7%, ~83% of revenue) — franchises running for more than 20 years such as Fantasy Westward Journey, plus Identity V, Eggy Party, Sword of Justice, Where Winds Meet and Marvel Rivals, and the new Sea of Remnants (launched in July 2026); Youdao (education and AI-powered tools) RMB 1.5 billion (+3.5%); NetEase Cloud Music RMB 2.0 billion (stable); and innovative businesses (e-commerce and others) RMB 1.6 billion (−3.5%). Full-year 2025 revenue was RMB 112.6 billion (vs RMB 105.3 billion in 2024), of which RMB 92.1 billion came from games, with net profit of RMB 33.8 billion (+14%).

A key detail for investors: what you buy on Nasdaq is an ADR, and 1 ADR = 5 ordinary shares of those listed in Hong Kong. That day the Hong Kong share closed at HK$185.20; times 5 is HK$926, about $118 at HK$7.84 per dollar — the same price as the ADR. All per-ADR figures in this analysis (earnings, dividend) are already multiplied by 5.

Why we like it

Three reasons.

THE GAMES BUSINESS KEEPS GROWING AND IS HIGHLY PROFITABLE: in the April–June quarter (reported August 20, 2026) games brought in RMB 25.0 billion (+9.7%), the company-wide gross margin rose to 70.4% and operating profit jumped to RMB 12.1 billion from RMB 9.1 billion a year earlier (+33%). It has games that last decades (Fantasy Westward Journey) and new global hits: after the quarter Marvel Rivals reached #2 on Steam's global top sellers chart and Where Winds Meet hit a record of monthly active players in China.
CHEAP AND CASH-RICH: at $118.75 it costs ~15.8 times the profit of the last 12 months and ~11 times what analysts expect; it holds RMB 167.5 billion (~$24.7 billion) in net cash — almost a third of its ~$76 billion market value — and a share buyback program of up to $5 billion running through January 2029 (in the quarter it bought back 2.8 million ADRs for $324.1 million).
THE DROP COMES FROM OUTSIDE THE BUSINESS: net profit fell to RMB 7.0 billion (from RMB 8.6 billion) because shares of other companies NetEase invests in lost value and because the tax rate rose to 25.5% (from 14.7%) — not because people stopped playing. The stock ended up 24% below its 52-week high ($156.44). Wall Street sees it that way: 25 analysts at Strong Buy, 6 at Buy and 1 at Hold, with an average target of $162.10 (+36.5%) — and even the lowest target ($132.36) is 11% above the purchase price.

Key Risk

#1: it's a Chinese company and the Chinese government rules over video games. Beijing decides which games can launch, how much minors can play and how in-game purchases work; in addition, NetEase is a Cayman Islands company that controls part of its Chinese operations through contracts (VIE), not as a direct owner — a structure its own annual report flags as a risk. Others:

profit is heading down this year: net profit for the quarter fell 19% and adjusted earnings per ADR were $1.77 versus the $2.28 analysts expected; the stock dropped ~4.5% that day;
it depends on hits: the company itself admits its pipeline of new games is "relatively lean", Sea of Remnants (July 2026) launched to criticism for being hard to learn and Ananta still has no date;
the dividend changes every quarter: it paid $1.16 per ADR for Q4 2025, $0.72 for Q1 2026 and $0.48 for Q2 (versus $0.57 a year earlier, −16%) — it is not a dividend that rises every year;
taxes: the Cayman Islands withhold nothing and NetEase says it does not consider itself a Chinese resident enterprise, but if Chinese authorities decided otherwise, 10% of dividends to foreign investors could be withheld; the ADR depositary also deducts a small fee;
currency: it earns in yuan and pays in dollars;
businesses outside games are not growing: music flat, innovative businesses −3.5%.

This is educational and informational content, not financial advice. Always consult a qualified financial advisor before making investment decisions.

Vectorial Data picked NTES on 2026-09-22 at $118.75.

Last updated: Invalid Date

Dividends received by the Vectorial portfolio

NTES has not paid a dividend to the portfolio yet.

Full Research

Qué hace. NetEase, Inc. (Nasdaq: NTES; Bolsa de Hong Kong: 9999) fue fundada en junio de 1997 por Ding Lei (William Ding), su director general y consejero. Opera desde Hangzhou, Zhejiang, con oficinas en Pekín, Cantón y Shanghái y presencia en Japón, Corea del Sur, Singapur, Estados Unidos, Canadá y Reino Unido; ~25,400 empleados de tiempo completo (dato de Yahoo Finance/StockAnalysis). Cotiza en Nasdaq desde 2000 y en Hong Kong desde 2020. Estructura legal: NetEase, Inc. es una sociedad de las Islas Caimán, no una empresa operativa china; opera a través de subsidiarias en China continental y de contratos con entidades de interés variable (VIE) en China, según su reporte anual 20-F de 2025.

El ADR. 1 ADR (American Depositary Share) = 5 acciones ordinarias. En Hong Kong la acción cerró en HK$185.20 → HK$926 por 5 acciones ≈ $118 al tipo de cambio de HK$7.84 por dólar, en línea con el precio del ADR. Acciones equivalentes en ADR: ~640 millones; capitalización ~$76,000 millones.

Resultados (segundo trimestre de 2026 — abril a junio —, publicados el 20 de agosto de 2026). Ingresos netos RMB 30,100 millones ($4,400 millones, +7.9%). Juegos y servicios relacionados RMB 25,000 millones (+9.7%); Youdao RMB 1,500 millones (+3.5%); NetEase Cloud Music RMB 2,000 millones (estable); negocios innovadores y otros RMB 1,600 millones (−3.5%). Utilidad bruta RMB 21,200 millones (+17.5%), margen bruto 70.4%. Gastos de operación RMB 9,100 millones (contra RMB 9,000 millones un año antes). Utilidad de operación RMB 12,100 millones (contra RMB 9,100 millones, +33%). Utilidad neta atribuible RMB 7,000 millones (contra RMB 8,600 millones; −19%); ajustada RMB 7,700 millones (contra RMB 9,500 millones). Utilidad por ADR: $1.60 (contra $1.99); ajustada $1.77 (contra $2.20), por debajo de los $2.28 que esperaba el consenso. Motivo de la caída según la empresa: disminución del valor razonable de inversiones en acciones y provisiones por deterioro registradas en el trimestre; la tasa efectiva de impuestos subió a 25.5% desde 14.7%. Flujo de operación del trimestre RMB 10,000 millones.

Primer semestre de 2026. Ingresos RMB 60,700 millones ($8,900 millones, +7.0%); utilidad neta RMB 17,700 millones (contra RMB 18,900 millones); utilidad por ADR $4.03 (ajustada $4.35). Gastos de investigación y desarrollo RMB 9,100 millones y de ventas y mercadotecnia RMB 7,100 millones. Margen bruto por negocio en el semestre: juegos 75.5%, Youdao 46.9%, Cloud Music 37.3%, innovadores 42.7%.

Año 2025 (base). Ingresos RMB 112,600 millones ($16,100 millones) contra RMB 105,300 millones en 2024; juegos RMB 92,100 millones (contra RMB 83,600 millones); utilidad neta atribuible RMB 33,800 millones (contra RMB 29,700 millones, +14%); ajustada RMB 37,300 millones.

Juegos. Franquicia Fantasy Westward Journey, Identity V, Eggy Party, Sword of Justice, Where Winds Meet (más de 80 millones de jugadores acumulados al cierre de 2025; récord de usuarios activos mensuales en China y más de 87% de reseñas positivas en Steam, según la llamada del segundo trimestre), Marvel Rivals (#2 del ranking global de más vendidos de Steam y #1 en varias regiones, incluido EE.UU.), Sea of Remnants (lanzado en julio de 2026; críticas iniciales por su curva de aprendizaje, con mejora del ánimo de los jugadores según la gerencia), y Ananta y Blood Message en desarrollo, sin fecha de lanzamiento. La gerencia reconoce una lista de lanzamientos "relativamente corta".

Caja, recompras y dividendo. Efectivo neto al 30 de junio de 2026: RMB 167,500 millones ($24,700 millones), contra RMB 163,500 millones al cierre de 2025 — ~32% de la capitalización. Programa de recompra de hasta $5,000 millones extendido hasta el 9 de enero de 2029; en el trimestre recompró 14.0 millones de acciones (2.8 millones de ADR) por $324.1 millones, y desde el inicio del programa ~24.9 millones de ADR por $2,300 millones. Dividendo trimestral variable, decidido por el consejo cada trimestre según utilidad, flujo y situación financiera (sin porcentaje fijo). Declarados por ADR: 3er trimestre 2025 $0.57; 4to trimestre 2025 $1.16; 1er trimestre 2026 $0.72; 2do trimestre 2026 $0.48 (fecha de registro 3 de septiembre, pago al ADR ~18 de septiembre de 2026 — ya pagado antes de esta compra). Suma de los últimos cuatro: $2.93 por ADR = 2.47% sobre $118.75. Los montos netos registrados por ADR son ligeramente menores (p. ej. $0.4775 por $0.48) por la comisión del depositario.

Impuestos. Las Islas Caimán no retienen impuesto sobre dividendos. NetEase considera que ni la matriz ni sus subsidiarias fuera de China son "empresas residentes" en China para efectos fiscales, pero advierte que la autoridad china podría determinar lo contrario; en ese caso los dividendos a inversionistas no residentes podrían sujetarse a una retención de 10% (20-F). Aparte aplican las reglas fiscales del país de cada inversionista.

Acción. $118.75 al momento de la compra (22 de septiembre de 2026); rango de 52 semanas $106.06–$156.44 (24% abajo del máximo). Utilidad por ADR de los últimos 12 meses $7.52 → P/E ~15.8x; utilidad esperada por los analistas ~$10.77 por ADR → P/E ~11.0x. Próximo reporte: 19 de noviembre de 2026. Consenso de 32 analistas (StockAnalysis): Strong Buy — 25 Compra Fuerte, 6 Compra, 1 Mantener, 0 Venta; objetivo promedio $162.10 (+36.5%), rango $132.36–$200.55. J.P. Morgan Compra con $180; Bank of America subió a $174; Barclays Mantener con $132.

Riesgos. (1) Regulación china sobre videojuegos (aprobación de títulos, límites a menores, cobros dentro del juego) y estructura VIE/Islas Caimán. (2) Utilidad neta en baja: −19% en el trimestre y resultado ajustado por debajo del consenso. (3) Dependencia de éxitos y lista de lanzamientos corta; Sea of Remnants arrancó con críticas y Ananta sin fecha. (4) Dividendo variable trimestre a trimestre ($1.16 → $0.72 → $0.48). (5) Posible retención china de 10% si la empresa fuera considerada residente fiscal en China, más comisión del depositario. (6) Tipo de cambio yuan/dólar. (7) Negocios fuera de juegos estancados (Cloud Music estable, innovadores −3.5%). (8) Pérdidas en su portafolio de inversiones en otras empresas pueden volver a golpear la utilidad neta.

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Researched: 9/22/2026Updated: 9/22/2026Next review: 3/22/2027

This is not financial advice. Consult a certified financial advisor.

The author may hold positions in the securities discussed.

Past performance does not guarantee future results.