Active Stock Evaluation: NetEase, Inc. (NASDAQ: NTES)

On Thursday, Shares of NetEase, Inc. (NASDAQ: NTES) declined -2.07% to $253.37. The stock recorded $252.08 as its minimum price and hit the max level of $255.78, during its most recent trading session. It traded total volume of 577.51K shares lower than the average volume of 1.05M shares.

NetEase, Inc. (NTES), one of China’s leading internet and online game services providers, recently declared its unaudited financial results for the first quarter ended March 31, 2018.

First Quarter 2018 Financial Results:

Net Revenues

Net revenues for the first quarter of 2018 were RMB14,173.00M (US$2,259.50M), contrast to RMB14,607.60M and RMB13,640.50M for the preceding quarter and the first quarter of 2017, respectively.

Net revenues from online games were RMB8,761.20M (US$1,396.70M) for the first quarter of 2018, contrast to RMB8,004.40M and RMB10,735.50M for the preceding quarter and the first quarter of 2017, respectively. Mobile games accounted for about 71.8% of net revenues from online games for the first quarter of 2018, contrast to 68.0% and 73.3% for the preceding quarter and the first quarter of 2017, respectively.

Net revenues from e-commerce were RMB3,732.50M (US$595.00M) for the first quarter of 2018, contrast to RMB4,653.70M and RMB1,857.30M for the preceding quarter and the first quarter of 2017, respectively.

Net revenues from advertising services were RMB462.00M (US$73.70M) for the first quarter of 2018, contrast to RMB736.60M and RMB445.20M for the preceding quarter and the first quarter of 2017, respectively. The top performing advertising verticals in the first quarter of 2018 were real estate, internet services and automobile sectors.

Net revenues from e-mail and others were RMB1,217.30M (US$194.10M) for the first quarter of 2018, contrast to RMB1,213.00M and RMB602.60M for the preceding quarter and the first quarter of 2017, respectively.

Gross Profit/ (Loss)

Gross profit for the first quarter of 2018 was RMB5,953.60M (US$949.10M), contrast to RMB5,744.60M and RMB7,483.60M for the preceding quarter and the first quarter of 2017, respectively.

Operating Expenses

Total operating expenses for the first quarter of 2018 were RMB4,746.60M (US$756.70M), contrast to RMB4,317.80M and RMB2,711.70M for the preceding quarter and the first quarter of 2017, respectively. The year-over-year and quarter-over-quarter increases in operating expenses were mainly because of increased marketing expenditures related to online games and research and development investments, as well as higher staff-related costs. Shipping and handling costs included in selling and marketing expenses for the first quarter of 2018 were RMB325.80M (US$51.90M), contrast to RMB393.30M and RMB213.30M for the preceding quarter and the first quarter of 2017, respectively.

Income Taxes

The Company recorded a net income tax charge of RMB282.70M (US$45.10M) for the first quarter of 2018, contrast to RMB290.40M and RMB943.00M for the preceding quarter and the first quarter of 2017, respectively. The effective tax rate for the first quarter of 2018 was 26.0%, contrast to 18.2% and 19.0% for the preceding quarter and the first quarter of 2017, respectively. The changes in the effective tax rate were mainly because of the fact that certain auxiliaries of the Company practiced higher operating losses in the current quarter. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter.

Net Income After Tax

Net income attributable to the Company’s shareholders for the first quarter of 2018 totaled RMB751.90M (US$119.90M), contrast to RMB1.30B and RMB3.90B for the preceding quarter and the first quarter of 2017, respectively. Non-GAAP net income attributable to the Company’s shareholders for the first quarter of 2018 totaled RMB1.30B (US$213.20M), contrast to RMB1.90B and RMB4.30B for the preceding quarter and the first quarter of 2017, respectively.

During the first quarter of 2018, the Company had a net foreign exchange loss of RMB375.10M (US$59.80M), contrast to net foreign exchange losses of RMB159.10M and RMB48.50M for the preceding quarter and the first quarter of 2017, respectively. The year-over-year and quarter-over-quarter changes in foreign exchange losses were mainly because of unrealized exchange losses arising from the Company’s U.S. dollar-denominated bank deposits and short-term loan balances as the exchange rate of the U.S. dollar against the RMB fluctuated over the periods.

NTES has the market capitalization of $34.68B and its EPS growth ratio for the past five years was 23.90%. The return on assets ratio of the Company was 10.90% while its return on investment ratio stands at 19.10%. Price to sales ratio was 4.31 while 55.60% of the stock was owned by institutional investors.

Michelle Smith

Michelle Smith

I am Michelle Smith and I give “Stocks Market Cap” an insight into the most recent news hitting the “Technology” sector in Wall Street. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community.