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Young Netease, fast to Hong Kong

via:博客园     time:2020/5/30 23:57:29     readed:85


Welcoming concerns

Text / Stone Jin

Source: IPO early know (ID: IPO Zhidao)

Ding Lei says, Netease did not succeed, still grow.

According to the IPO news, after Thursday's hearing on the Hong Kong stock exchange, the official website of the Hong Kong Stock Exchange disclosed the prospectus of Netease after the hearing, with CICC, Credit Suisse and JPMorgan as the co sponsors.

This also means that once Netease officially completes its second listing in Hong Kong on June 11, it will become another domestic Internet giant after Alibaba, with both U.S. and Hong Kong shares listed simultaneously.

It is worth mentioning that, at the same time after the prospectus was disclosed, the official WeChat official account of the NetEase released the letter of the founder and CEO Ding Lei, which is also the first letter from the 20 letter of NetEase published on the Nasdaq stock market, the title of which is "the power of believing in love" by Ding Lei. (Note: the letter to shareholders is also disclosed in the prospectus)


According to the prospectus, Netease started as a typical Chinese portal in the late 1990s, and launched the media and e-mail services that are still booming; in 2001, Netease's strategy expanded to the online game business, according to app Annie's data, according to IOS and Google play in 2019 It has become the second largest mobile game company in the world in terms of comprehensive user spending.

In 2006, Netease launched Youdao business, which has become an intelligent learning platform listed on the NYSE; in 2013, Netease cloud music launched a music streaming platform; in 2016, Netease set up an e-commerce platform to strictly select, which has grown into a mainstream private brand commodity platform.

As of December 31, 2019, the total number of registered users of Netease email has exceeded 1 billion, and the total number of registered users of Netease cloud music has exceeded 800 million. In 2019, the number of monthly active users of Youdao will also exceed 100 million.


From 2017 to 2019, Netease's net income was 44.43 billion yuan, 51.17 billion yuan and 59.24 billion yuan (the same below), and its net profit was 11.88 billion yuan, 8.61 billion yuan and 13.46 billion yuan, respectively.

In the first quarter of 2020, net income of Netease was 17.06 billion yuan, an increase of 18.3% year on year; gross profit was 9.38 billion yuan, an increase of 21.2% year on year; net profit was 3.55 billion yuan, an increase of nearly 30% year on year.

It should be noted that in the past three fiscal years and the first quarter of 2020, no single customer accounted for more than 10% of revenue in each period.

Game business mainly

Among them, online game business is the main source of income of Netease. It mainly generates mobile game revenue by selling virtual props in the game, and generates end game revenue by selling prepaid points.

In 2001, Netease released its first large flagship game, dahuaxiyou. In the following 19 years, the content and form of the game were continuously updated and innovative play methods were continuously introduced, making the series of games still popular with players.

In the popular online game product matrix of Netease in the past two years, the representative games include "Yin Yang division" and "wilderness action". Among them, the former won the top of the best-selling list of IOS in China for many times in 2019, and the latter won the top of the best-selling list of IOS in Japan for many times in 2019.

It is worth noting that the online game business in the first quarter of total revenue again reached 80%. In other words, Netease changed back

This also indicates that as the business sector with the highest gross profit rate of Netease, it may bring higher growth of the company's overall net profit in the future. Moreover, as the top three company in China's long-term outbound revenue ranking, Netease needs to further explore its overseas market. In 2019, overseas game revenue accounted for 11% of total game revenue.

Long term development driven by technology

In addition to the game business, Youdao is the most reliable second growth point of Netease in the past few years, and was listed on the New York Stock Exchange in October 2019.

Netease founded Youdao in 2006, and launched its flagship product Youdao dictionary in 2007. Counting by the number of monthly active users, Youdao dictionary is still the most popular language application in China. Based on the early success of Youdao dictionary, Youdao's expanding services and products meet the lifelong learning needs of users of different ages.

In the first quarter of 2020, Youdao's net income was 540 million yuan, up 139.8% year-on-year; its gross profit rate was 43.5%, up 20 percentage points from 23.4% in the same period of 2019. Among them, the net income of learning products and services was 440 million yuan, a year-on-year increase of 226.4%. The gross margin of this part of business in Q1 increased to 48.7% from 18.5% in the same period of 2019.

The net income of online courses in the first quarter was 520 million yuan, a year-on-year increase of 286.8%; among them, the net income of excellent courses increased by 311.9% to 440 million yuan.

Obviously, the increase of net income and gross profit is mainly due to K12 payers and per capita unit price, scale effect and further optimization of teachers' salary structure.

In the first quarter of 2020, the number of paid registrations of Youdao K12 was 152800, a year-on-year increase of 358.7%; the per capita unit price of Youdao boutique courses increased by 158.2% to 1619 yuan. In addition, based on the sales volume of Youdao dictionary launched in August 2019, which is significantly higher than that of 2.0, the revenue of Q1 learning products also increased by 188.7% year on year.

In addition, Netease also embeds technology into the learning and teaching process, so as to ensure that well-organized services and products can provide first-class learning experience. Over the years, Netease has established its own research and development of OCR, NMT, language data mining and speech recognition, as well as data analysis technology, laying the foundation for services and products, and iterating and improving according to a large number of data generated by users.

Innovative business brings imagination space

At present, Netease's innovative business includes Netease cloud music, Netease strict selection, Netease email, Netease CC live broadcast, Netease media, Netease payment and other well-known applications.

Among them, Netease cloud music was launched in April 2013. As of December 31, 2019, the number of registered users of Netease cloud music exceeded 800 million. Over the same period, the platform has more than 100000 independent musicians, whose songs have played more than 270 billion times in 2019.

Netease yanxuan mainly sells its own brand products, including consumer electronics, food, clothing, household products, Kitchenware and other daily necessities. It mainly purchases from China's original design manufacturers (ODM). ODM mode enables strict selection to provide high-quality goods at a lower cost by eliminating brand premium and eliminating channel middlemen such as distributors and retailers. In addition to online, Netease yanxuan has opened four offline stores in Hangzhou and Shanghai, attracting more consumers to explore hot products in yanxuan through experiential retail.

Therefore, although there are some short-term losses, with Netease gradually finding out the specific methods of various industries, the incremental space of innovative business will be further released. Since the second quarter of 2019, the overall gross margin of innovation business has changed from negative to positive.

Ding Lei said in the prospectus that Netease will focus on four things: building an organization with self evolution ability; making more products that make the team proud; firmly promoting the global strategy; and promoting more inclusive resources.

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