Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>NetEase, during its 2025 first quarter financial results presentation, outlined its performance and future strategies across various segments.</li><li>The company reported an increase in total net revenue by 7.4% year-over-year, reaching RMB 28.8 billion, driven primarily by its gaming division, which witnessed a 12% increase in revenue.</li><li>Net revenue from online games was notably high, with a growth of 14% quarter-over-quarter and 15% year-over year, emphasizing the success of titles like “Where Winds Meet” and “Marvel Rivals.” Baptista Research looks to evaluate the different factors that could influence the company's price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.</li></ul>

NetEase, during its 2025 first quarter financial results presentation, outlined its performance and future strategies across various segments.The company reported an increase in total net revenue by 7.4% year-over-year, reaching RMB 28.8 billion, driven primarily by its gaming division, which witnessed a 12% increase in revenue.Net revenue from online games was notably high, with a growth of 14% quarter-over-quarter and 15% year-over year, emphasizing the success of titles like “Where Winds Meet” and “Marvel Rivals.” Baptista Research looks to evaluate the different factors that could influence the company's price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

NetEase: Will Its eSports Integration & Expansion Help Establish NetEase As A Prominent Player In The Global Esports Arena?

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>NetEase reported C1Q25 revenue, GAAP operating profit and GAAP net income in line, 25% and 31% vs. our estimates, and in line, 29% and 30% vs. consensus. </li>
<li>The game revenue up cycle was as we predicted, but the surprise came from AI-enhanced advertising and organizational streamlining, leading to operation margin improvements.</li>
<li>With game revenue up cycle still in full swing, we incline to keep NTES on the TOP BUY list and raise TP from US$122 to 136.</li>
</ul>


NetEase reported C1Q25 revenue, GAAP operating profit and GAAP net income in line, 25% and 31% vs. our estimates, and in line, 29% and 30% vs. consensus. 
The game revenue up cycle was as we predicted, but the surprise came from AI-enhanced advertising and organizational streamlining, leading to operation margin improvements.
With game revenue up cycle still in full swing, we incline to keep NTES on the TOP BUY list and raise TP from US$122 to 136.


[NetEase, Inc. (NTES US, BUY, TP US$136) TP Change]: C1Q25 Review: Game Upcycle + Margin Leverage

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>We had <a href="https://www.smartkarma.com/entities/pop-mart-international-group-l" target="_blank" data-smartkarma-citation="entities:29016:1" rel="noopener">Pop Mart International (9992 HK)</a> at the cusp of index inclusion. An increase in <a href="https://www.smartkarma.com/entities/postal-savings-bank-of-china-c-2a9047eb-af5e-4621-85c4-3cac677a1d13" target="_blank" data-smartkarma-citation="entities:22848:1" rel="noopener">Postal Savings Bank of China (1658 HK)</a>'s FAF led to <a href="https://www.smartkarma.com/entities/pop-mart-international-group-l" target="_blank" data-smartkarma-citation="entities:29016:1" rel="noopener">Pop Mart</a> missing out.</li>
<li>Estimated one-way turnover at the rebalance is 3.18% leading to a round-trip trade of HK$3.8bn (US$489m).</li>
<li>There are large inflows for <a href="https://www.smartkarma.com/entities/netease-inc" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a> and <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a> due to a FAF methodology change for Secondary Listings.</li>
</ul>


We had Pop Mart International (9992 HK) at the cusp of index inclusion. An increase in Postal Savings Bank of China (1658 HK)'s FAF led to Pop Mart missing out.
Estimated one-way turnover at the rebalance is 3.18% leading to a round-trip trade of HK$3.8bn (US$489m).
There are large inflows for NetEase (9999 HK), Trip.com Group (9961 HK) and Baidu (9888 HK) due to a FAF methodology change for Secondary Listings.


HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>NetEase announced 1Q25 results: total revenue grew by 7% YoY to RMB28.8bn, largely in line with consensus estimate.</li><li>Operating profit increased by 37% YoY to RMB10.4bn, 25% ahead of consensus estimate, mainly due to the disciplined opex control (-14% YoY).</li><li>Games business regains momentum, with reaccelerating and better-than-expected revenue growth in 1Q25 (+12% YoY), and the strong growth of contract liabilities in 1Q25 (+19%/16% YoY/QoQ) should support the growth of games revenue in the coming quarters, in our view. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

NetEase announced 1Q25 results: total revenue grew by 7% YoY to RMB28.8bn, largely in line with consensus estimate.Operating profit increased by 37% YoY to RMB10.4bn, 25% ahead of consensus estimate, mainly due to the disciplined opex control (-14% YoY).Games business regains momentum, with reaccelerating and better-than-expected revenue growth in 1Q25 (+12% YoY), and the strong growth of contract liabilities in 1Q25 (+19%/16% YoY/QoQ) should support the growth of games revenue in the coming quarters, in our view. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

NetEase (NTES US) - Strong 1Q25 Results on Solid Games Business and Disciplined Opex Control

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.</li>
<li>The official index changes and indicative weights for the June 2025 index rebal event will be announced after the close on Friday 16th May 2025.</li>
<li>We continue to expect zero index changes for June 2025 but we estimate there to be capping flows of US$1.85bn one-way.</li>
</ul>


The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
The official index changes and indicative weights for the June 2025 index rebal event will be announced after the close on Friday 16th May 2025.
We continue to expect zero index changes for June 2025 but we estimate there to be capping flows of US$1.85bn one-way.


Quiddity Leaderboard HSTECH Jun25: US$1.85bn One-Way; Announcement Soon

China

NetEase, Inc. operates as an leading internet technology company providing online services including content, community, communication, and commerce. The Company develops and operates online games, electronic commerce, internet media, innovative business, and other businesses. NetEase expands its businesses to Japan, North American, and other other international markets.

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NetEase (9999 HK)

NetEase: Will Its eSports Integration & Expansion Help Establish NetEase As A Prominent Player In The Global Esports Arena?

NetEase, during its 2025 first quarter financial results presentation, outlined its performance and future strategies across various segments. The...

Baptista Research

[NetEase, Inc. (NTES US, BUY, TP US$136) TP Change]: C1Q25 Review: Game Upcycle + Margin Leverage

NetEase beats revenue and profit estimates in Q1, driven by game revenue and AI-enhanced advertising, leading to improved margins. Analysts raise...

Blue Lotus Research Institute

HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?

Pop Mart misses inclusion due to a float increase for a different stock. Estimated turnover is 3.18% and trade is HK$3.8bn. NetEase, Trip.com,...

Brian Freitas

NetEase (NTES US) - Strong 1Q25 Results on Solid Games Business and Disciplined Opex Control

In view of the solid business performance of games, we raise FY25-27E revenue forecast by 2-6%. We lift our SOTP-derived target price to US$136.5...

CMB International

Quiddity Leaderboard HSTECH Jun25: US$1.85bn One-Way; Announcement Soon

We estimate one-way flows of US$1.85bn which translates to a turnover of 8.4%. Some names are expected to see large index inflows due to upward...

Janaghan Jeyakumar, CFA

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52-week Range

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NetEase: Will Its eSports Integration & Expansion Help Establish NetEase As A Prominent Player In The Global Esports Arena?

NetEase, during its 2025 first quarter financial results presentation, outlined its performance and future strategies across various segments. The...

Baptista Research

[NetEase, Inc. (NTES US, BUY, TP US$136) TP Change]: C1Q25 Review: Game Upcycle + Margin Leverage

​NetEase beats revenue and profit estimates in Q1, driven by game revenue and AI-enhanced advertising, leading to improved margins. Analysts raise...

Blue Lotus Research Institute

HSCEI Index Rebalance: Why Did Pop Mart (9992 HK) Miss?

Pop Mart misses inclusion due to a float increase for a different stock. Estimated turnover is 3.18% and trade is HK$3.8bn. NetEase, Trip.com,...

Brian Freitas

NetEase (NTES US) - Strong 1Q25 Results on Solid Games Business and Disciplined Opex Control

In view of the solid business performance of games, we raise FY25-27E revenue forecast by 2-6%. We lift our SOTP-derived target price to US$136.5...

CMB International

Quiddity Leaderboard HSTECH Jun25: US$1.85bn One-Way; Announcement Soon

We estimate one-way flows of US$1.85bn which translates to a turnover of 8.4%. Some names are expected to see large index inflows due to upward...

Janaghan Jeyakumar, CFA

NetEase beats revenue and profit estimates in Q1, driven by game revenue and AI-enhanced advertising, leading to improved margins. Analysts raise...