Coupland Cardiff’s Asia Alpha Fund reported a new position in NetEase last month. The company is one of the largest online and mobile gaming companies in China. Its gaming portfolio includes Fantasy Westward Journey II, Tianxia III, Heroes of Tang Dynasty Zero and Ghost II. It also operates some of the most popular international online games in China including World of Warcraft, StarCraft II and Hearthstone.
According to fund commentary, NetEase (along with Tencent) is “opening up a large market share gap from other emerging players” and reinvesting heavily into content creation and talent. The CC team estimates that the company trades at a FCF multiple of ~22x yet is likely to grow earnings by more than 40% this year.