Chinese Gaming is Easy?
NetEase Inc. (NTES) is an Internet technology company. The Company operates in three segments: Online Gaming, Advertising, Wireless Value-added Services and Others. The Company provides its Internet and wireless value-added applications, services and technologies and advertising services to Guangzhou NetEase and Guangyitong Advertising and they operate the NetEase Websites and the online advertising business. Guangzhou NetEase has two majority-owned subsidiaries, Youdao Computer (a search business operator) and Wangyibao (the operator of its Wangyibao payment system).
[PostStockWidget stock_valuation="" pricetype="live" manual_date="Dec. 21, 2012, 2:04pm GMT" symbolcodes="'NTES'" symbolprices="95" div_align="right"]
Because this is a China based stock, we are only recommending a half position. NTES has a good track record, large cash position and the low PE multiple is discounting a lot of bad news.
Note that the EPS never declined during the 2008-2009 market crash. The current valuation is an attractive entry point with reasonable upside.
Purple Chips 12 -18 month target: $USD 82.00
LOW VALUATION IN NETEASE AT $USD 67.03 (NTES, $66.92) HALF POSITION
PURPLE CHIPS TARGET: $82.00 POSITION SIZE: HALF (2.5) P/E: 12.1X DIV: $1.40 (2.0%) MKT CAP: $8.8B CASH: $3.0B RETURN ON CAPITAL: 26.8% EARNINGS YIELD: 12.4% 5 YR EPS Growth rate*:22.9% P/E/G Ratio: 0.56 EPS: $5.57 2015 EST.: $6.74 2016 EST.: $7.35
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
