Corporate Webpages NetEase.com, Inc.
NetEase.com, Inc. (NTES) is a company based in China that provides
software for online gaming. It probably wouldn't work too well
in the U.S., but in China principal revenue comes from hourly
charges for playing online games at say, internet cafes. We
hear Republicans belly-aching about over-regulation by
government stifling American competition and sending jobs
overseas to the Chinese. The fact is that NetEase has to work
through more regulation than American companies ever dreamed
about, namely a sort of whacky Chinese Government that will deem
if a computer online game is "harmful" upon submission to it
after years of costly development, often rejecting the game, and
forcing NetEase to try to market its games overseas. Several
Chinese "ministries" passing upon software reviews make the U.S. FDA look
like child's play for drug companies. The worst of themis the
Chinese "Ministry of Culture." NetEase attempts to
provide internet services for Chinese also ran into heavy
censorship problems and oppressive regulations. What the
"General Administration of Press and Publication" considers
"harmful" is child's play for American pre-teens.
We generally do not like foreign-based stocks, although Chinese
companies with listed stock often go out of their way to meet
U.S. SEC standards for domestically-based companies.
Unfortunately, NetEase is not one of them. Our review penalizes
this stock for what we believe is inadequate management
reporting and auditing. On top of that, we found that a company
whose principal products are based upon software development had
a corporate website loaded with bugs, missing links, and the like.
On top of that, company websites have suffered denial of service
attacks from hackers, and it seems unable to control some of these.
Attempts to work out a deal with Microsoft involved Chinese
requirements for Microsoft to export technology making it more
difficult to work with American companies.
Despite all this, the company has a remarkable earnings growth
and its creativity has resulted in many successful games with
millions of adherents after they finally do make it to market.
Of course the company has to struggle with patent protection and
knock-offs, just as American companies feel they have to do with
the Chinese.
Executives of this company are paid largely with American stock
options. This we don't like. Their base salaries are certainly
nothing to shout home about.
The company also makes money through advertising and
home-shopping internet shopping malls.
The financials of this company look really good, although
Chinese have an ability to produce wonderful financial
statements. The "un-audited" part of them is the problem. The
company submits no quarterly reports to the SEC. High earnings
growth has given the company stock high intrinsic value.
08-29-2011: NetEase.com, Inc. (NTES): For Anything On Line, China is It's Own Worst Enemy
(WAIT FOR PAGE TO LOAD COMPLETELY BEFORE LINKS WORK.)
Company Profile
News
Comparison with Peers
Bond Issue
Zenith Index
Financial Statements
Financial Ratios
Market Grader
Intrinsic Value (Disc. CashFlow)
Intrinsic Value (Proj. Earnings)
Scout Stock Rating
Projected Earnings
Research Reports
Analysts' Opinions
Insider Activity
Institutional Activity
Sentiment
Short Interest
Stock Report
Management's Discussion
Moving Average Chart
Right Time Study
Channel Potential
Intraday Chart
Stock Fetcher
Point & Figure Chart
Wall Street Analyzer
Marketspace Chart
Time Series Forecast
Neural Network Prediction
Stock Options
Ultimate Trading Systems
Recommendation
Corporate Wepages
Company Profile |
News |
Comparison |
Similar Companies Performance:
Bond Issue |
Zenith Index |
Under current market conditions, a Zenith Index Score of 1.20 or above is required for a positive rating on this factor. 1.21 -1.30 is considered acceptable, 1.30-1.40 is consider strong and > 1.40 is considered exceptionally strong. Accounting statements in this section often contain mistakes, especially in earlier years' totals, but data is deemed sufficient for us to give a rating. More accurate financial statements follow in the next section.
NetEase.com, Inc. (NTES ) Sector: Technology
SP Tower D 26th Floor Tsinghua Industry: Internet Software & Services
No 1 Zhongguancun East Road Hai Exchange: Nasdaq
Beijing, 100084
China
NetEase.com, Inc., an Internet technology company, engages in the
development of applications, services, and other technologies for the
Internet in China. It provides online game services to Internet users
through the in-house development or licensing of massively multi-player
online role-playing games, including Fantasy Westward Journey, Westward
Journey Online II, Westward Journey Online III, Tianxia II, Heroes of Tang
Dynasty, and Datang, as well as the licensed game, Blizzard
Entertainment's World of Warcraft. The company also offers online
advertising on its Web sites. In addition, NetEase has paid listings on
its search engine and Web directory, and classified advertising services,
as well as an online mall, which provides opportunities for e-commerce and
traditional businesses to establish their own storefront on the Internet.
Further, it provides wireless value-added services, such as news and
information content, matchmaking services, music, and photos from the Web
over SMS, MMS, WAP, IVR, and Color Ring-back Tone technologies.
Additionally, the company offers community services, including instant
messaging, online personal advertisements, matchmaking, alumni clubs, and
community forums; and aggregates news content on world events, sports,
science and technology, and financial markets, as well as entertainment
content, such as cartoons, games, astrology, and jokes from over 100
international and domestic content providers. NetEase.com, Inc. was
founded in 1997 and is based in Beijing, the People-Ęs Republic of China.
Last Trade: 45.95 52-Week Range: 55.00 - 35.20
Trade Date: 08-25 Avg. Volume: 929,040 Shares
Index Membership: Employees: 5,254
Corporate Governance: (Information Not Available)
EPS: 3.40 Dividend Amount: $ 0.00 Yield: 0.00%
Ex-Dividend Date: N/A Mkt Cap: $ 6,000,000K
Payout Ratio: 0.00%
Last Split Factor (new for old): 4:1 Split Date: Mar 28, 20
Key Statistics:
Enterprise Value: $ 4,290,000K Revenue (ttm) : $ 979,100K
Gross Profit: $ 562,820K
Earnings before Income Tax, Depreciation and Amortization: $ 486,740K
Enterprise Value/Revenue (ttm): 4.39 Revenue per Share: $ 7.52
Enterprise Value/EBITDA (ttm): 8.82 Qtrly Rev Growth (y to y): 32.40%
P/E Ratio (fwd projected): 11.78 P/E Ratio (current): 13.52
P/E Growth Ratio (5 yr expected): 0.81 Operating Margin: 45.63%
Price/Sales Ratio: 6.18 Profit Margin: 44.80%
Price/Book Value: 3.41 Book Value: $ 13.58/sh.
Return on Assets: 15.42% Net Income Avl to Common: $ 438,600K
Return on Equity: 28.30% Diluted Earnings/Share: $ 3.40
Qrtly Earnings Growth (yoy): 59.10%
Balance Sheet Items : Cash Flow Items (ttm):
(most recent qrtr) (trailing 12 mo.)
Total Cash: $ 1,760,000K Operating Cash Flow:$ 530,890K
Total Debt: $ 0K Lvgd Free Cash Flow:$ 277,990K
Total Debt/Equity: 0.00
Total Cash/Share: $ 13.44
Current Ratio: 6.23
Share Statistics: Stock Price History:
Shares Outstanding: 130,600K Stk 52-Week Change: 15.14%
Float: 72,340K S&P 500 52-Wk Chng: 10.70%
Sh. Short % of Float: 0.00% 50-Day Moving Avg: 47.47
Short Ratio: 2.60 200-Day Moving Avg: 46.64
% Held by Institutions: 0.00% Beta: 0.99
% Held by Insiders: 0.00%
Analysts' Estimates: Cur. Qtr Next Qtr Cur. Year Next Year
___________________________ Jun 11 Sep 11 Dec 11 Dec 12
Average Earnings Estimate 0.78 0.83 3.43 3.90
Average Revenue Estimate 46M 266M 1,050M 1,220M
Factors Comparing This Company to Its Industry Leader (1.0 = Average):
Long Term EPS Growth Rate (5 yr): 3.643 EPS Growth (Qrtly YoY): 25.500
PEG Ratio (ttm, 5 yr expected): 2.833 P/E Ratio (ttm): 4.636
Revenue Growth (Qrtly YoY): 7.286
Annual Income Statements: All numbers in thousands)
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Total Revenue 835,800 550,307 452,119
Cost of Revenue 272,978 142,431 82,024
Gross Profit 562,822 407,877 370,096
Operating Expenses:
Research & Development 48,246 35,780 30,344
Selling, General & Administrative 128,473 75,709 59,127
Non-Recurring Expenses 0 0 0
Other Operating Expenses 0 0 0
Total Operating Expenses 0 0 0
Operating Income or Loss 386,103 296,387 280,625
Income from Continuing Operations:
Total Other Income/Expenses Net 4,882 18,633 -2,525
Earnings Before Interest & Taxes 390,985 315,020 278,100
Interest Expense 0 0 0
Income Before Taxes 390,985 315,020 278,100
Income Tax Expense 52,270 45,973 44,071
Minority Interest 569 2,000 4
Net Income from Continuing Op.s 339,283 271,047 234,033
Non-recurring Events:
Discontinued Operations 0 0 0
Extraordinary Items 0 0 0
Effect of Accounting Changes 0 0 0
Other Items 0 0 0
Net Income 339,283 271,047 234,033
Preferred Stock & Other Adjustmnts 0 0 0
Net Income Avail To Common Shares 339,283 271,047 234,033
Annual Balance Sheets: All Numbers in Thousands
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Current Assets:
Cash & Cash Equivalents 216,358 170,669 823,214
Short Term Investments 0 0 0
Net Receivables 49,834 38,656 44,192
Inventory 0 0 0
Other Current Assets 1,346,459 958,474 8,194
Total Current Assets 1,612,652 1,167,799 875,600
Long-Term Investments 0 0 6,201
Property, Plant & Equipt 114,691 81,699 37,931
Goodwill 0 0 0
Intangible Assets 23,777 32,980 1,841
Accumulated Amortization 0 0 0
Other Assets 6,947 6,417 6,744
Deferred Long Term Asset Charges 232 613 1,824
Total Assets 1,758,299 1,289,508 930,142
Current Liabilities:
Accounts Payable 159,988 116,370 55,892
Short/Current Long Term Debt 0 0 0
Other Current Liabilities 117,449 85,465 65,625
Total Current Liabilities 277,437 201,835 121,517
Long Term Debt 5,060 29 0
Other Liabilities 0 0 29
Deferred LT Liability Charges 221 0 0
Minority Interest -2,606 -1,968 31
Negative Goodwill 0 0 0
Total Liabilities 280,112 199,896 121,577
Stockholder Equity:
Misc. Stocks Options Warrants 0 0 0
Redeemable Perferred Stock 0 0 0
Preferred Stock 0 0 0
Common Stock 406 390 387
Retained Earnings 1,299,823 941,239 694,625
Treasury Stock 0 0 0
Capital Surplus 129,099 114,910 84,844
Other Stockholder Equity 48,859 33,072 28,710
Total Stockholder Equity 1,478,187 1,089,612 808,565
Net Tangible Assets 1,454,410 1,056,632 806,724
Annual Cash Flow: All Numbers in Thousands
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Net Income 339,283 0 234,033
Operating Activites:
Depreciation 35,232 21,031 13,333
Adjustments to Net Income 30,974 106 35,994
Changes in Accounts Recv'bls -13,657 -1,046 -10,686
Changes in Liabilities 41,519 84,019 23,851
Changes in Inventories 0 0 0
Changes in Other Op'ing Actv's 0 -66,361 -767
Total Cash Flow fr Operations 433,245 306,796 295,757
Investing Activities:
Capital Expenditures -45,219 -59,723 -19,543
Investments 0 -616 0
Other Cash Flows fr Investing 0 0 0
Total Cash Flows fr Investing -397,767 -279,418 -499,708
Financing Acitivies:
Dividends Paid 0 0 0
Sale or Purchase of Stock 3,663 5,937 -21,589
Net Borrowings 0 0 -1,466
Other Cash Flows fr Financing 0 0 0
Total Cash Flows fr Financing 3,663 5,937 -23,055
Effect of Exchange Rate Change -2,137 2,994 -20,617
Change in Cash & Cash Equiv.s 37,004 36,309 0
NTES NetEase.com, Inc. [Indices near +3.0 or near zero,
or < zero bear special attention.]
P/E Ratio Tests:
Current P/E Ratio < 28? 2.0710 P/E Ratio > 5? 1.0000
P/E Ratio Vs Growth Rate: 0.4300 Forward P/E Ratio < 28? 2.3769
Sales Tests:
Price/Sales Ratio < 2.3? 0.3722 Inventory/Sales < 5%? 1.0000
Sales < $1 billion? 1.1965 Operating Margin < 7.5%? 0.1644
Balance Sheet Tests:
Debt/Equity < 0.40? 1.0000 Long-Term Debt Service: 3.0000
LTD Being Reduced? 1.0000 Short-Term Debt Service: 3.0000
Current Ratio > 2? 3.0000 Working Capital >= 1.5? 1.0000
Leverage Ratio < 20%? 3.0000 Debt / Assets < 1? 3.0000
Quick Ratio > 1? 1.0000 Inventory Turnover > 1? 1.0000
Shares Out Decreasing? 0.6000 Market Cap.> 1.5 Billion? 0.2500
Profit Margin > 7.5%? 3.0000
Income Tests:
Dividend Yield > 2.0%? 0.0000 EPS Annual Growth > 10%? 3.0000
Enterprise Value/Revenue: 2.9267 EPS 5-yr Growth > 20%? 3.0000
Enterprise Value/EBITDA: 1.2600 EPS Growth Consistent? 1.2000
EPS Qrtly Growth > 10%? 3.0000 Collection < 45 days? 2.0677
Rev. Qtrly Growth > 15%? 3.0000 Gross Pft/Cur. LTD < 1? 3.0000
EPS Annual Growth > 10%? 3.0000 Borrowing Int. Rate< 6%? 1.0000
Stock Performance Tests:
Volatility > 25%? 1.7561 % Held by Insiders < 5%? 3.0000
Beta > 1.25? 0.7920 % Held by Institut. < 50? 3.0000
50 Da MA > 200 Da MA? 0.0542 % Held by Institut. > 30? 0.0000
52-Wk Change vs. S&P 500: 0.7134 Short Ratio > 5? 0.5200
Price/Book Value < 3? 0.5900 Short % of Float > 20? 0.0000
Return on Assets > 17%? 0.9071 Average Volume > 100,000? 3.0000
Cash Flow Tests:
Oper. C.F. > Lever'd C.F: 1.9097 Positive Free Cash Flow? 1.0000
Positive Oper. Cash Flow? 1.0000 Price to C.F./sh. Ratio: 1.5417
Cash Flow / Assets >.10? 0.0000
NTES NetEase.com, Inc. Overall Zenith Index: 1.6061
Financial Statements |
Financial Ratios |
. . . . . . . . . . . . 1 = Highest , 10 = Lowest
Market Grader |
Intrinsic Value (DCF) |
Intrinsic Value by Discounted Cash Flow Method:
Intrinsic Value (PEG) |
Intrinsic Value by Projected Earnings Growth Method:
Stock Scout |
We find "Scout" to be a bit biased toward the high end, so anything under a 6 is considered a negative, 6 and above, positive.
Projected Earnings |
Research Reports |
Analysts' Opinions |
Insider Activity |
Institutional Activity |
Institutional Orders to Buy or Sell:
Sentiment |
Zenith uses the "sentiment" score above or below 50 to award a positive or negative point in the Decision Matrix.
Short Interest Ratio |
As the short interest rises as a percentage of average daily share volume (Days to Cover), this is considered a measure of negative sentiment. Similarly, a decrease in that percentage is considered positive sentiment.
Stock Report |
Management's Discussion of Results of Operations Excerpts |
Moving Average Chart |
Right Time Study |
Channeling Potential |
The summary below includes a value for `Degree,' which refers on a
scale of 1 to 10 the range of a channel in the period under consi-
deration compared to the total range of price movement. It also looks
for the last closing price to be within the channel, otherwise zeroed.
The `Index' is the `Degree' weighted for volatility. Generally, the
the higher the index, the more suitable is the stock for trading as
a `rolling stock' between channel high and low points.
Results for NetEase.Com Inc.:
Symbol? NTES
Total Months Available: 116
Months in Cycle? 4
Months Covered by Periods: 12
Period 1 Period 2 Period 3
H1 L1 H2 L2 H3 L3
43.66 35.28 55.00 35.55 52.25 40.48
RANGE = 55.00 TO 35.28 Close = 46.32
CHANNEL = 43.66 TO 40.48 Degree = 2
Volatility = 6.87% Index = 1
Intraday Chart |
20 Days:
Stock Fetcher |
Point & Figure Chart |
Wall Street Analyzer |
Marketspace Chart |
Time Series Forecast |
Neural Network Prediction |
"Neurostock" can only track long trades. Therefore its performance, as tracked by itself on stocks which are consistently falling, may not appear as good as it could if each "sell" signal were a "short sale."
Ultimate Trading Systems |
The corresponding trades for the above chart are shown in tabular form below.
Recommendation |
| Factors | Weighted Points |
|---|---|
| News | + 1 |
| Comparison | - 1 |
| Industry | - 1 |
| Bond Issue | 0 |
| Zenith Index | + 1 |
| Non-GAAP vs. GAAP Earnings < 1% | - 1 |
| Cash Flow | + 1 |
| Ratios | + 1 |
| Market Grader | + 1 |
| Intrinsic Value DCF | + 1 |
| Intrinsic Value DDM | + 1 |
| Stock Scout | + 1 |
| Projected Earnings | + 1 |
| Research Reports | + 1 |
| Analysts | + 1 |
| Executive Perquisites | - 1 |
| Insider Activity | - 1 |
| Institutional Activity | + 1 |
| Management Reporting | - 1 |
| Short Interest | + 1 |
| Sentiment | - 1 |
| Standard & Poor's | + 1 |
| Moving Average | - 1 |
| Right Time Study | - 1 |
| Stock Fetcher | 0 |
| Point & Figure | - 1 |
| Wall Street Analyzer | - 1 |
| Marketspace Chart | - 1 |
| Time Series Chart | - 1 |
| Neural Network | 0 |
| Stock Options | + 1 |
| Ultimate Trading Systems | + 1 |
| Total | + 4 |
Place 640 shares of NetEase.com, Inc. (NTES) on the Active List.
