NTES
NetEase, Inc.
$119.55
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 61.1% below fair value
You pay
$119.55
Bear
$210.35
Fair
$307.20
Bull
$413.48
Bear
$210.35
+76.0%
9% stage 1 growth, 11% discount
Fair
$307.20
+157.0%
14% stage 1 growth, 11% discount
Bull
$413.48
+245.9%
19% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
7.4x
Market is pricing in (growth)
-5.0%
vs 14.4% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $154.25 from 33 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $307.20 per share.
Warnings
Wall Street's average price target is $154.25 (from 33 analysts). Our estimate is 142% above the consensus -- consider that gap carefully.
Financial statements were converted from CNY into USD using USDCNY at 0.1479 USD per CNY.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions