Opinions
The Panic-Proof Portfolio (Stockchase Research)
Netease.com Inc
NTES-Q
TOP PICK
Dec 12, 2023
N/A
Stock price when the opinion was issued
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WEAK BUY
The 3 main internet companies in China are Sina (SINA-Q), Sohu (SOHU-Q) and NetEase (NTES-Q) and they all do slightly different things. Sina is probably the most diversified. Investors are expecting a lot out of these companies. Going to be a big market for internet companies. Volatile, so use a long term view of 3/5 years.
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BUY ON WEAKNESS
There are a good half dozen Chinese companies on the internet which are real viable businesses right now. This one is one of the leaders on the gaming side. Has had a very good run here, so wouldn't rush out to buy it now. Good long term stock and in 3 years should make you a decent return on your investment.
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TOP PICK
Stockchase Research Editor: Michael O’Reilly
Following the release of quarterly gross profit increasing 27% we reiterate NTES as a TOP PICK. Quarterly cash reserves are growing as debt is retired and shares bought back. It trades at 20x earnings and supports a 22% ROE. The modest dividend is backed by a payout ratio under 30% of cash flow. We continue to recommend a stop at $86, looking to achieve $133 — upside potential of 22%. Yield 1.5%
(Analysts’ price target is $133.59)
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This Hong Kong based online games developer has more than 100 million active monthly users in a space that is viewed as recession proof by analysts. It trades at 18x earnings and supports a 22% ROE. Quarterly cash reserves are growing while debt is retired and shares bought back. Its dividend is backed by a payout ratio of 30% of cash flow. Recommend setting a stop-loss at $86, looking to achieve $136 -- upside potential of 28%. Yield 1.6%
(Analysts’ price target is $135.93)