Goldman Sachs has issued a research report expressing a positive outlook for NetEase-S (09999). The investment bank notes the company's share price has performed well since the announcement of its first-quarter results in May and anticipates several catalysts in the second half of the year.

These catalysts include the planned July launch of the domestic PC version for the new game "Sea of Forgetfulness" and the expected inclusion in the Southbound Stock Connect program by September, following the completion of its dual primary listing in late June.

Goldman Sachs has reiterated its "Buy" rating on NetEase. The firm has raised its target price for the Hong Kong-listed shares from HK$260 to HK$264. Similarly, the target price for NetEase's US-listed shares (NTES.US) has been increased from $166 to $169.

The report highlights that, in contrast to broader market concerns about AI disruption in software/applications and peers facing margin pressure from significant AI investment increases, NetEase is viewed as a "non-AI compound growth stock."

Goldman Sachs points to NetEase's effective integration of AI into its game development processes and organizational optimization. The bank forecasts the company will achieve over 20% year-on-year operating profit growth by 2026, with a free cash flow yield of 9%.

Current projections estimate that the new game "Sea of Forgetfulness" could generate over RMB 5.8 billion in gross merchandise volume (GMV) in the next 12 months, driving double-digit growth in both game GMV and revenue during the second half of the year.