NetEase Q1 shows revenue growth but EPS stagnates amid China risks; Hold rating advised

NetEase reported Q1 results with 6.1% revenue growth and 14.8% gross profit growth, but earnings per share remained flat, highlighting the need for new game titles to boost profits. The company remains heavily reliant on gaming, which accounts for 81.9% of its projected FY25 revenue, and faces ongoing risks from China’s regulatory environment that affect its valuation. Despite solid fundamentals and a shareholder-friendly management, the stock faces a persistent discount due to China-related concerns. The analyst recommends a Hold rating with a staggered entry approach to manage potential downside amid valuation and macroeconomic uncertainties.