Strong 2Q14 on Mobile Game and World Cup Event;Aggressive Investment on Multiple Fronts; Maintain Hold Rating
NTES will report 2Q14 results onWed., August 13th after the market close followed by a 9pm ETconference. We believe NTES’s 2Q14 results may be better than consensus drivenby the World Cup and mobile games. However, webelieve the company might spend a significant amount of investment in mobileapps, promotion of mobile games and sponsor World Cup events. Therefore, wemight see a dip in its margin in 2Q14. While we believe such investment islikely to benefit NTES in the long run, we maintain our Hold ratingdue to the short term margin pressure. @Tian_THCapital