By Jiahui Huang


NetEase's Hong Kong-listed shares rose in the wake of strong growth in quarterly gaming revenue, with analysts largely positive on the Chinese company's pipeline of new games.

The videogame publisher's shares were up 2.05% at 144.40 Hong Kong dollars (US$18.49) early Friday, while the benchmark Hang Seng Index was down 1.2%. The company's U.S.-listed ADRs closed 3.7% lower overnight.

The rise in NetEase's Hong Kong shares came after the company reported a 7.2% on-year rise in revenue, the bulk of which came from the operation of online games. Net profit rose 13%, as the relatively stable cost of revenue offset a rise in operating expenses.

Nomura analysts Jialong Shi and Rachel Guo said the revenue growth was "impressive," highlighting in a research note that the rise came despite a high base a year ago from NetEase's blockbuster "Eggy Party" game.

"We think this set of gaming results is encouraging," they wrote, noting that the company hadn't launched a major new title during the quarter, and that it comes after rival Tencent posted flat domestic gaming revenue in the first quarter.

Analysts are also positive about two new titles launching summer: "Where Winds Meet" and a mobile version of "Naraka: Bladepoint." Nomura analysts think the latter has the potential to become another blockbuster name.

Citi analysts said the company appears to be on track to further diversify its gaming revenue from a broader game genre and geographic presence.

Citi raised its target price for the stock to US$123.00 from US$116.00 after it raised its revenue forecast, partly due to new game releases.

Jefferies analysts Thomas Chong and Zoey Zong trimmed their target price by about 3% to HK$202, but kept a buy rating, saying they view the company's online games business "as a solid cash cow in the long run."

Citi analysts also kept a buy rating on the stock.


Write to Jiahui Huang at jiahui.huang@wsj.com


(END) Dow Jones Newswires

05-24-24 0016ET