NetEase Spanks Q1

• Posted by Danny
• on May 16th, 2012

The Chinese online gamer/internet provider blows past EPS estimates as organic growth surges.

 

NetEase ($NTES) cranked out Q1 earnings after the bell today that handily beat the Street by 13 cents. They outpaced our Estimize as well with their EPS of $1.14. This was a pleasant surprise as many of our other holdings having been stinking up the joint lately.

A big part of NetEase’s success last quarter was the strong growth of their in-house products. Having already re-upped their license with Activision ($ATVI) for World of Warcraft, it was good to see increasing demand for their own games.

Here’s the Q1 YoY breakdown:

• Revenue +39%
• Online gaming revs +31%
• Ad revs +13%
• Net income +28%
• Cash flow +34% to $212 mil.

Looking ahead, the CEO had these positive comments:

“In the second and third quarters of 2012, we plan to initiate beta testing of several highly anticipated games in our pipeline…With respect to our licensed games, we are pleased to have renewed our contract with Blizzard Entertainment to continue our existing cooperation on Blizzard Entertainment’s World of Warcraft in mainland China.”

Ranked 7th in the BeanScreen this month, NetEase’s fundamentals should remain strong after this report. We’ll have the new data crunched in a few days. Back on Jan. 9, we opened a position in NTES at $42.25. We may be adding soon if she drops back into the $56-58 range.

 

 

sources:  Chinese Online Gaming NetEase Rises On Q1 Earnings – Investors.com

NetEase Reports First Quarter 2012 Unaudited Financial Results – Yahoo! Finance

disclosure: we currently own shares in NTES

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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