Kaiyuan Securities released a research report indicating that as of the end of Q4, NetEase-S's (09999) contract liabilities increased by 5% quarter-over-quarter to RMB 20.5 billion, demonstrating strong growth momentum. Based on the anticipated timeline for new game releases, the current stock price corresponds to PE ratios of 14.1x, 12.5x, and 11.6x, respectively. The firm is optimistic about the combined growth drivers of long-term operation for existing games, the launch of new titles, and the deepening of AI integration, leading it to maintain a "Buy" rating.
The main points from Kaiyuan Securities are as follows:
Long-term operations are revitalizing classic games. The performance of "Where Winds Meet" reflects the company's strength in overseas expansion, and the pipeline of games in development is robust. In Q4 2025, games and related value-added services revenue reached RMB 22.0 billion (a year-on-year increase of 3.4%); the gross profit margin was 70.5%, up 3.8 percentage points year-on-year.
The PC version of "Fantasy Westward Journey" achieved record-high revenue in both Q4 and the full year of 2025. "World of X" has seen revenue growth for five consecutive years; following a multi-platform interoperability upgrade in December 2025, metrics such as Peak Concurrent Users and paying user counts reached new highs. The firm believes the company can revitalize classic games through optimizations in art and gameplay.
Following the release of its anniversary update in Q4, the mainland Chinese version of "Where Winds Meet" saw daily active users and revenue hit record highs, topping the iOS game bestseller chart in China. After its overseas launch in November 2025, it peaked at number two on Steam's global bestseller list. As of February 11, 2026, the game had attracted over 80 million players worldwide. The report suggests the overseas success of "Where Winds Meet" may indicate the company's capability to effectively "tell Chinese stories," and it is optimistic about the overseas potential of other major "Chinese-style" titles like "Back to Tang."
"Forgotten Sea" is entering the open-world genre with a novel approach combining "nautical adventure themes and puppet aesthetics." As of February 12, 2026, it had approximately 15.34 million pre-registrations across platforms and a TapTap score of 8.8, with an expected launch in Q3 2026. The party game "Starry Painter Sunny Day" has already obtained a publication license, and its PC beta test data was excellent; it is expected to launch in 2026. Two auto-chess games are in development, including "Yao Yao Chess," which features a Chinese mythological theme and has secured a license. "Infinity" demonstrated test data and player feedback in January that met company expectations, and the product is planned for a simultaneous global and multi-platform release.
Cloud Music user engagement is improving. There is optimism regarding sustained AI-driven demand in education and marketing fueling growth for the Youdao business. Cloud Music's Q4 revenue was RMB 1.97 billion (up 5% year-on-year). In 2025, both DAU/MAU ratios and average daily mobile usage time increased year-on-year. The firm expects business growth to be driven by the expansion of high-quality content.
Youdao's Q4 revenue was RMB 1.56 billion (a year-on-year increase of 17%). AI-driven subscription revenue exceeded RMB 100 million (growing over 80% year-on-year), while advertising revenue fueled by demand for AI application marketing grew over 50% year-on-year. The firm anticipates that demand from AI education and application marketing will continue to drive growth.
Risk warnings include potential delays for new game launches or weaker-than-expected monetization performance, as well as risks related to declining revenue from existing games.