＜Research＞Macquarie Stays Bullish on Overall Online Game Industry, Slightly Cuts NTES-S (09999.HK) TP to $225

　　Macquarie commented in a research report that despite the downturn in the macro environment, the game industry remained a bright spot, with the continued release of quality games, such as Dungeon & Fighter by TENCENT (00700.HK) -1.400 (-0.366%) Short selling $1.01B; Ratio 17.138% and San Guo: Mou Ding Tian Xia by BILIBILI-W (09626.HK) +1.000 (+0.797%) Short selling $101.88M; Ratio 27.576% (BILI.US) .

　　Into summer, Macquarie remained optimistic that more high-quality games are on the horizon, which could be a key catalyst for further growth and earnings visibility for companies in the sector. The broker believed that a more mature industry will accelerate market consolidation, which will naturally favour leading industry players.

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　　Macquarie significantly raised its fiscal year forecast for Dungeon & Fighter from RMB6 billion to RMB18 billion - RMB20 billion, driving a 5% increase in Tencent's game revenue forecast. The broker stayed bullish on the overall online game industry and elevated its target price for TENCENT by 2% from $473 to $481. On the other hand, NTES-S (09999.HK) -0.300 (-0.203%) Short selling $24.11M; Ratio 6.600% (NTES.US) 's iOS grossing is expected to expand by 15% YoY during the same period, despite the high base effect and fewer new game launches.

　　The market is worried about the regulation of the game industry that NetEase is facing. Macquarie pointed out that while this will have a short-term impact on the company's financial position, the market's current outlook for full-year growth in game revenues has largely reflected concerns about regulatory adjustments, so the broker is less pessimistic about NetEase.

　　Still, due to the intensification of online game competition, Macquarie slightly lowered NetEase's profit forecast by 1-3% and trimmed its target price by about 1% from $228 to $225. The broker kept the company on its Marquee Buy list.

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