NetEase Games logo is seen above the company’s booth one day before the 2019 China Digital Entertainment Expo & Conference (ChinaJoy) at Shanghai New International Expo Center on August 1, 2019 in Shanghai, China.
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NetEase is a Chinese internet giant but its brand name might not be that well known out of its home market.
The company carried out a secondary listing in Hong Kong on Thursday raising $21.09 billion Hong Kong dollars ($2.7 billion).
Here’s a short rundown of the company.
How does it make money?
NetEase is the second-largest online gaming firm in China, behind only Tencent. Most of its revenue comes from this business.
In the first quarter of 2019, NetEase raked in net revenue of 17.1 billion yuan ($2.4 billion), an 18.3% year-on-year rise. Of that, nearly 79% came from online games, both on PC and mobile.
Some of the company’s hit titles include the “Fantasy Westward Journey” series and “LifeAfter.”
The second major revenue category is what the company calls “innovative businesses and others net revenues,” which includes its music streaming service, livestreaming and e-commerce products. This division accounted for over 17% of revenue in the March quarter. NetEase does not break out figures for the individual products.
NetEase also has an online education product, known as Youdao, which accounts for just over 3% of revenue.
But this unit is growing fast. Youdao’s revenue was 541.4 million yuan ($76.5 million) in the first quarter, a 139.8% rise from the same period in 2019.
NetEase was listed on the Nasdaq in 2000.
On Thursday, it began trading on the Hong Kong stock exchange after carrying out a secondary listing. Each share was priced at 123 Hong Kong dollars. They were higher on the first morning of trade.
The Hong Kong listing comes amid rising tensions between the U.S. and China, which looks to threaten some firms listed on Wall Street, particularly those from the world’s second-largest economy. Some politicians in Washington are pushing for greater scrutiny of Chinese firms through new proposed legislation that holds the threat of delisting some of those firms in the U.S.
Part of the money NetEase raised through the Hong Kong listing will be put toward “globalization strategies and opportunities,” the company said. Though that international push is quite new, NetEase is looking to accelerate that.
“Encouraged by our success in overseas markets such as Japan, we are more confident and committed than ever to extending our reach internationally,” NetEase CEO William Ding said in the company’s first quarter earnings report.
NetEase has found success in Japan so far through games such as “Knives Out.”
It has also been focusing on striking partnerships with other international brands such as Warner Bros. for the new game “Harry Potter: Magic Awakened,” which is based on the story of the boy wizard.