Ladies and gentlemen, thank you for standing by. Welcome to the NetEase, Inc. Fourth Quarter 2013 Earnings Call. (Operator Instructions). This conference is being recorded today and at this time, I'd like to turn the conference over to Brandi Piacente. Please go ahead, ma'am.

Thank you, operator. Please note the discussion today will contain forward-looking statements relating to future performance of the company and are intended to qualify for the Safe Harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risk and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control, and could cause actual results to differ materially from those mentioned in today's press release and discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20-F. The company does not undertake any obligation to update these forward-looking information, except as required by law. As a reminder this conference is being recorded. In addition a webcast replay of this conference call will be available on the NetEase corporate website at ir.com. I will now turn the conference call over to Mr. Onward Choi, acting Chief Financial Officer, who will read the prepared remarks on behalf of Mr. William Ding, Chief Executive Officer of NetEase.

Thank you, Brandi. Before I begin, please note that for the purposes of this discussion, all percentages are based on renminbi. 2013 was another dynamic year of growth for NetEase. Throughout the year we made a number of advancements that diversify and expand our reach among China rising Internet community. Out dedication to quality and innovation continue to play a critical role in our success. During the year we introduced a host of outstanding new games, content and services to our loyal and growing community, while simultaneously strengthening our financial position. Out total revenue increased by 16.6% in 2013, led by a 14% in online game revenues and 28.8% growth in advertising services revenue. We completed the year with solid financial results with total fourth quarter revenues growing by 11.1% year-over-year and 2.8% quarter-over-quarter. During the year we introduced comprehensive upgrades for some of our most popular games, namely Fantasy Westward Journey, Westward Journey Online II and Ghost. We also launched several online games in new genres to further diversify our portfolio. In addition we've broadened our reach among China's rapidly growing mobile population by entering the mobile gaming and social networking markets. Taking a look at our online game portfolio, Kung Fu Master, New Westward Journey Online II, Heroes of Tang Dynasty II and Ghost II are delivered standout performances in 2013. Our games are known for their ability to withstand the test of time. Much of this success can be attributed to our advanced technology, unified research and development process and our ability to continually optimize our products and services. During the fourth quarter Fantasy Westward Journey II celebrated its 10th year anniversary with an exciting comprehensive upgrade of this game and the launch of the mobile version in July. Both the mobile and PC versions have demonstrated…

Thank you, sir. (Operator Instructions). Our first question is from the line of Dick Wei with Crédit Suisse. Please go ahead.

Hi. Thank you for taking my questions. Two questions. First question is on some of the game performance, if you can comment on the recent trend for Q4 for the existing games such as Fantasy Westward Journey and [inaudible] World of Warcraft, and certain new games such as Legends of Tibet if you could. And second question is on the margin strength, operating margin strength, do you expect that to continue to come down due to the investment in advertising that [could lead] to a combined loss? Thank you.

So, Dick. Regarding your first questions on the game performances of our various games in the fourth quarter of 2013, basically we are quite satisfied with their performances in the fourth quarter of 2013. And with regard to your second question on the potential trends on our operating margin trends so to call, I think basically we do feel that we would still try to achieve a relatively stable operating margin in the upcoming years. But in view of the fact that there would be more intense competitions in the market and more amounts that we will be spending in promoting our various products and services we do see that there would be some compressions to our existing operating margins a little bit.

Okay. Maybe just a quick follow-up to that. Was it the World of Warcraft performance in Q4 so that gross margin comes down or was it more from others and mobile games? Thank you.

Can you just repeat that one time you just have a slightly bad connection.

Okay. Sure. So for the Q4 gross margin will be down sequentially was it because of the World of Warcraft performance – other games or was it for some of the other say mobile game investments? Thank you.

I think basically the gross margins the fall would be because we have more cost being spent for our self-developing in this quarter. But at the same time you also see that we have also got an increase in the revenues contributors from our licensed games in this quarter.

Got it. Thank you.

Thank you. Our next question is from the line of Alicia Yap with Barclays. Please go ahead. Alicia Yap – Barclays Capital : Hi, good morning, William and Onward, thanks for taking my questions. My first question is online advertising. So since like your year-over-year sequential growth is very strong this quarter and the sequential improvement is actually much better than previous year. So I wanted to know what are some of the reasons for the strong growth and what are some of the main contribution areas and is there any -- how much of the mobile actually contribute for the total ad revenues? And also with that is that is the trend will continue in your view and what is your overall expectations for the advertising demand environment for 2014 given that we also have some popular sports event this year?

So Alicia. Regarding your questions on the increased contributions from our advertising business on a sequential basis, basically we do view that in terms of the mobile contributions at this point of time it is still not very significant. But we do see that from our various mobile initiatives like the mobile news applications, our cloud music, our news reader and other applications still to go, they are having a very nice growing trend in millions of users. And at the moment we do see that the main contributions will be coming from our traditional portals and also the -- and things like that. Alicia Yap – Barclays Capital: Just a follow-up on that, is that will this kind of like the 38% type of year-over-year growth momentum can continue into the 2014?

This is what we are expecting, yes. Alicia Yap – Barclays Capital: Sure. And then my second question quickly is that on the update on the mobile games. So I know that you will be launching a number of new mobile games this year. Is there any particular games that management would think will be more meaningful or potentially a good hit? And then will there be any games that will be come from the game studios that you have invested?

Okay, so basically regard to various mobile game strategies we can take it back in 2011 when we first started on this part of the business market and we focused on two ways. First would be our self-development games and the other way would be investing on some outside studios or some teams that we consider that would be of good quality. Okay and other philosophy that we always focused on it the professions or the highest qualities of the team products that we happen to roll out into the market. Unlike other peers that would just roll numerous games to the market without pursuing a very good quality, we always try to make sure that the qualities of our products would be of the highest before we actually put them through to the market. And one more point that William we would like to supplement is that at the moment we have already licensed two more new games that are going to roll out to the China market and they are now in the process of being localizations. And at the same time going back to what we have done so far in 2013 by far we have got a number of a new mobile games in the markets like the pocket versions of our Fantasy Westward Journey and the other one would be our mini Westward Journey. And we also expected that progressively in 2014 we would got kind of more new games to roll out in market and one of those would be a touch games type mobile games that we are expecting. Alicia Yap – Barclays Capital: Okay just quickly follow up on William's comments on the through overseas mobile games, so that is in additions to these Heartstone world class mobile versions that will be -- Blizzard will be launching. So this in addition to that you have two more overseas mobile games right?

Yeah. Alicia Yap – Barclays Capital: Okay thank you, Onward.

And so what Williams would supplement is that currently for the Heartstone it in fact technically speaking is not a mobile game and what we have done is actually licensed two new games that would be categorized as the mobile games that are going to roll out to the markets soon. Alicia Yap – Barclays Capital: Okay thank you, Onward, William.

Thank you. Our next question comes from the line of Jiong Shao with Macquarie. Please go ahead.

Good morning. Thank you for taking my questions. I have two questions for William if I may. The first question is on mobile games again. So most of your peers in both PC game and a mobile game developer industries are sort of launching their mobile game center or publisher business. I was just wondering what your sort of a longer term whether or not Netease is going to sort of heading towards that version as well. And related to that many of our developers now are spending quite a bit of money marketing their new wares, new games where we are or what are we thinking about potentially spending how we control the spending to promote these games that’s my first long question sorry?

So basically with regards to your first question about our view on how we again cooperate with the various developers externally, basically we would hold an open-ended discussion and we always welcome to some developments and projects and kind of cooperation’s with other studios and things like that. Then with regard to our own studios we are quite [indifferent to] the needs to watch our external counterparts kind of doing because we have our own platforms and our own media and our own marketing channels and things like that and basically our potential users that need to spend on procuring our various products would be much lower and we do see that our studios got this own competitive act in this respect.

Okay great, thanks and my second question is among your few, quite a few interesting mobile properties we noticed that you have a lottery app as well. Could you comment a bit on sort of your thoughts and your outlook for this particular segment and any kind of regulatory risk in your view, thank you?

So basically with regard to our strategies in certain of our mobile businesses, basically we have very extensive and comprehensive assessment before we are doing so. At the moment we have quite number of applications already in place on the mobile area and we have our own, in the news category we have our mobile implications and for the two utilities category we have our [cloud dictionaries] and also the cloud nodes and for the information categories we have our cloud music and also the news reader, and in terms of our social category we have our YiChat and also another savings tool called the [Quadrant]. And basically we have our own logic behind in booting our various category and with regard to our business on the lottery tickets sales, the mobile applications regarding the lottery ticket sales, basically, we have a very good payment platforms and also experiences being offered to our users. And before, one month ago, we have got a user that has won RMB 200 million prize, which is the highest ever in this area of selling the lottery tickets on behalf of the service provider. And one week ago, we have also got another user that has won another price of RMB 5.32 million as well and we do this kind of selling on behalf our business model is very good to our potential users and we do see that the application offer a very good usage businesses to them.

RMB 200 million jackpot, I guess I better make a bet right now. Thank you, William, Onward.

Thank you.

Thank you. Our next question from the line of Tian Hou with T.H. Capital. Please go ahead.

Good morning, everyone. I have a question related to your overseas efforts. So I wonder what are some games that you plan to roll out in the overseas market and how -- what the potential revenue contribution could be in 2014? So, that's a first question.

[Non English]

Okay.

One second Tian. First for the translation.

Okay. So with regard to Tian's first question about how our overseas business expansion plan would be for our own self developing, basically at the moment we have got two game one would be the Ghost that is already in operation in Vietnam and the other one would be the Heroes of Three Kingdoms which is a mobile type game that we are working on to operate in Vietnam and also Thailand. We are expecting that those games would be hopefully be launched in the first quarter of 2014. And with regard to your second question about the potential revenue contribution from those overseas games, at the moment we do not expect that their contribution would be very significant.

Thank you. And the second question regarding your 2014 game pipeline. So I wonder how many games in the MMORPG area are you going to plan to launch and also what game and also how many mobile game in total are you planning to launch?

Okay. So basically with regard to Tian's second question about some of these game pipeline in 2014 for the MMORPG we will do plan to have about four new games coming out in the market in 2014 and no new web games will be coming out and for mobile games be somewhere around five or more. Okay. So if you supplement on what William has commented earlier, the previous number does not include our license game. If we also take the license game into account we do expect that the total number of new games that we are going to roll out in the market for MMORPG will something around five to six mobile games by taking into account the latest mobile games as well, this will be somewhere more than 10.

That's very helpful. So the last question is related to the Yixin. So, I wonder how many registered users you have now and is that possible to also give us an active user either daily or monthly.

Okay. Because of the unique features of our Yixin product because all the users would possess the real identities. So we do not have any numbers to disclose for the moment but we will have more update as we come to a more appropriate timing. Okay. So basically for using Yixin or YiC hat this is a very important strategic product and we will continue our commitment to invest in this area in order to make this to be a very successful flagship product in the social networking area and on the mobile area.

Thank you, William and thank you Onward. That’s all my questions.

Okay.

Thank you. Your next question comes from the line of Thomas Chong with Bank of China International. Please go ahead. Thomas Chong – BOCI Research Limited: Hi, good morning. I have two questions. My first question is relating to your overseas strategy. Can management comments about in terms of the user behavior and the preferences how is it different from the China market? And my second question is regarding the first quarter games performance. Given right now we are in the middle of the quarter can management comment about the performance of your sales developed in titles as well as more upfront cost? Thanks.

Basically with regard to the questions about, on the user behavior of the users the overseas versus those in China, I think basically first of all NetEase has been a very good company that it is capable and experienced on self-developed games and by going outside overseas expansions is what we have aimed and our goal going forward. And through the co-operations with some overseas counterparts we will be able to learn some new experiences as well and after over 16 years of business operations in the market this is also one of the aim that we are always tracking for. And we are also through the overseas expansion we do also look forward to further improve the qualities of our products so that this can give a balanced experiences to our users. And to quote for one examples on our overseas expansion in Vietnam by licensing our Ghost products there we do learn one thing that Haku versus the GDP we got somehow relationships there. Thomas Chong – BOCI Research Limited: Thanks. And my second question relates to the first quarter performance for the self-developed games and mobile forecast given we are in the middle of the first quarter. Thanks.

Basically we are still very confident and quite satisfied with all the various games whether they are the self-developed or licensed games so far in the first quarter of 2014. Thomas Chong – BOCI Research Limited: Got it, thanks. Thanks, William, thanks, Onward.

Thank you. At this time I would like to turn the conference back to management for any closing remarks.

Thank you everyone once again for joining us today. If you have further questions please feel free to contact Cassia Curran, NetEase's IR manager, based in Hangzhou or The Piacente Group, Investor Relations. Have a wonderful day.