NetEase (NTES, Financial) illustrated significant progression and offered an immersive gaming experience to the gamers through the launch of innovative current games coupled with their unique expansion packs.
Making good moves
NetEase also penetrated into the mobile gaming segment by successfully launching 12 licensed and self-made mobile games during the fiscal year 2014. The mobile presence of NetEase is achieving significant momentum with its mobile games and also all through its superior-performing mobile news application, where it is starting to gain from initial monetization initiatives.
The solid efforts of NetEase to excite its customers with innovative and unique game offerings along with expanding into the mobile gaming domain is believed to significantly benefit the company in terms of better revenue streams and enhanced shareholder value.
There was significant growth witnessed in the company’s e-commerce and portal service offerings contributing approximately 27.7% expansion in the net revenue for the year when both the games and services deliveries are collectively considered.
The portal services, ecommerce and mobile game offerings of NetEase is estimated to benefit significantly from the expanding user base and therefore provide huge benefits to the company in a long run.
The rapid acceptance of innovative expansion packs for the company’s major and most popular games signifies the robust understanding of NetEase about its customer choices and preferences.
NetEase is focused on expanding its YiChat user base in addition to its plans to launch additional mobile games for this year. In the fourth quarter, NetEase launched an innovative 3.0 version of YiChat that helped this expansion. The free call functionality is well accepted by its key users and is enabling it to develop a robust and dynamic mobile social network. Moreover, NetEase targets on further extending its market reach by releasing an enterprise version of YiChat which should serve small and medium-sized enterprises by this year end. Also, its e-commerce business grew significantly during 2014.
In January, NetEase released Kaola which is a cross-border e-commerce platform. By leveraging this new platform NetEase is believed to service the cross-border e-commerce export trade activities in China. NetEase also plans to utilize this self-operated platform and its strategic partnership with Sinotrans to allow for accelerated delivery services to the customers of China by tracing overseas goods and address the huge RMB1 billion Chinese markets in 2014.
The robust efforts of NetEase to expand its e-commerce transactions across the border by launching new tools and its sharp focus on accelerating the introduction of newer mobile games in addition to the release of unique mobile apps is forecasted to significantly expand the company’s current customer base.
Conclusion
Overall, the investors are advised to invest into NetEase, Inc. looking at the impressive company valuations with trailing P/E and forward P/E ratios of 16.85 and 2.01 respectively. Moreover, the company has better valuation than the industry’s average P/E of 25.85. The PEG ratio of 1.01 is also attractive compared to the poor industry’s average of 1.69. The profit margin of 40.61% looks attractive for the investors.
