NetEase: Significantly Undervalued With Strong Growth Prospects
- NetEase has grown and diversified its business significantly over the past couple of years.
- Current valuation assumes no future growth, and even a decline in growth, which is not likely to happen.
- NetEase is trading near the bottom of its forward valuation, and its ex-cash P/E of 7.6 makes it a deep value play on China’s online gaming market.
- $87 price target implies 30% upside, while downside should be limited to 10%, giving investors an asymmetric reward-risk investment opportunity.