CLSA publishes research report today

CLSA released its research report today to maintain a "buy" rating on the shares of NetEase (Nasdaq:ntes).

The following is the full report:

NetEase has just released a strong second-quarter earnings, which is 9% higher than the average analyst forecast. NetEase has not released any performance forecasts. We'll get more details after NetEase's earnings conference call. Maintain the "buy" rating of NetEase stock. NetEase is still our preferred stock in China's online gaming industry.

Second quarter performance points

Revenue growth of 15% Year-on-year, the chain growth of 5% to 2.3 billion yuan, compared with the average forecast of 2% high. NetEase game revenue growth of 13% Year-on-year, to 1.8 billion yuan, accounting for the total revenue of 86%. Internet advertising revenue exceeded expectations, the year-on-year growth of 33% to 245 million yuan, accounting for the total revenue of 11%.

Operating profits surged 21% per cent year-on-year, mainly due to revenue growth and profit margins.

Operating margins rose 2% per cent year-on-year. This could be due to the price increases for the two flagship games of February this year, as well as the decline in revenue contributions to the Low-margin licensing game "World of Warcraft".

According to the United States General accounting standards, net profit rose 25%, the chain growth of 3% to 1.1 billion yuan. Earnings per share of 8.41 yuan. 9% higher than the average analyst expected.

Conference

NetEase will be in Beijing time August 15 9:00 to hold earnings conference call, the number is 1-877-941-1427 (International users for 1-480-629-9664).