21 Jan 2025 CMB International Global Markets | Equity Research | Company Update Tencent (700 HK) Solid core businesses; upbeat on long-term development of e-commerce and AI We expect Tencent will continue to deliver solid earnings performance in 4Q24, driven by strong games revenue growth and resilient marketing business. We forecast total revenue to grow by 8% YoY to RMB167.6bn (in line with consensus) and non-IFRS net income to grow by 29% YoY to RMB55.2bn (5% ahead of consensus) in 4Q24. On 17 January, w ...

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (700 HK) with a target price of HK$520.00, implying a 37% upside from the current price of HK$380.00 [1][2] Core Views - Tencent is well-positioned for sustained strong performance in 2025, driven by robust growth in its gaming and advertising segments [7] - The company's gaming revenue is expected to grow by 16% YoY in 4Q24 and 8% YoY in 2025, supported by evergreen titles and new releases like *Dungeon & Fighter Mobile* [8] - Advertising revenue is projected to grow 15% YoY in 4Q24 and 2025, with video ads and WeChat Channels gaining market share [9] - Fintech and business services revenue is forecasted to grow 5% YoY in 2025, driven by economic recovery and new tools like WeChat Mini Shops [9] Financial Performance - Tencent's adjusted operating profit margin is expected to expand to 34.7% in 4Q24 and 37.9% in 2025, supported by a shift towards higher-margin businesses [10] - The company's adjusted net profit margin is projected to rise to 30.3% in 4Q24 and 34.1% in 2025 [10] - Revenue is forecasted to grow 9% YoY in 4Q24 and 8% YoY in 2025, with net income reaching RMB 240.9 billion in 2025 [20][21] Gaming Segment - Domestic gaming revenue is expected to grow 16% YoY in 4Q24, driven by strong performance of *Dungeon & Fighter Mobile* and deferred revenue of over RMB 100 billion [8] - International gaming revenue is projected to grow 17% YoY in 4Q24, supported by the release of *Path of Exile 2* and contributions from Supercell's *Brawl Stars* [8] - Tencent's gaming pipeline includes titles like *Honor of Kings World* and *Valorant Mobile*, set for release in 2025 [17] Advertising Segment - Social advertising revenue is expected to grow 16% YoY in 4Q24, while media advertising revenue is forecasted to grow 4% YoY [9] - WeChat Channels and video ads are gaining market share, contributing to the segment's outperformance [9] Valuation - The SOTP valuation for Tencent is HK$5.4 trillion, with the gaming segment valued at HK$1.6 trillion (18x 2025E P/E) and the advertising segment at HK$1.2 trillion (18x 2025E P/E) [23][24] - The target price of HK$520.00 is based on a 19x 2025E P/E multiple [10][23] Peer Comparison - Tencent's 2025E P/E of 14.0x is lower than global gaming peers like EA (17.0x) and Take-Two (21.3x) [25] - The company's 2025E P/S of 4.7x is higher than cloud service peers like Alibaba (1.4x) and Baidu (1.5x) [25]

Investment Rating - Tencent Holdings maintains a "Buy" rating [4] Core Views - The inclusion of Tencent in the 1260H list by the US Department of Defense has limited direct impact on the company's operations [2] - The 1260H list does not authorize any direct restrictions on the listed companies, but indirect effects in financing and supply chain areas should be monitored [2] - There is a possibility that Tencent could be added to the NS-CMIC list, which would restrict US entities from trading its securities [3] - Tencent may face supply chain challenges due to potential classification as a "military end-user" under US export control regulations [3] - Historical precedents suggest that Tencent could potentially be removed from the 1260H list through appeals, as seen with Xiaomi in 2021 [3] Financial Projections and Valuation - Revenue is projected to grow from CNY 609,015 million in 2023 to CNY 795,437 million in 2026, with a CAGR of 9.24% [6] - Net profit attributable to the parent company is expected to increase from CNY 115,216 million in 2023 to CNY 216,284 million in 2026, with a CAGR of 23.45% [6] - Earnings per share (EPS) are forecasted to rise from CNY 12.19 in 2023 to CNY 23.45 in 2026 [6] - The P/E ratio is expected to decline from 22.65x in 2023 to 16.41x in 2026, indicating improving valuation metrics [6] Financial Ratios and Performance - Gross margin is projected to improve from 48.13% in 2023 to 55.18% in 2026 [12] - Return on Equity (ROE) is expected to increase from 14.25% in 2023 to 17.78% in 2024, before slightly declining to 16.33% in 2026 [12] - The debt-to-asset ratio is forecasted to decrease from 44.61% in 2023 to 38.12% in 2026, reflecting a stronger balance sheet [12] - The current ratio is expected to improve from 1.47 in 2023 to 2.43 in 2026, indicating better liquidity [12] Market and Industry Context - Tencent's stock price closed at HKD 409.40, with a 12-month price range of HKD 257.97 to HKD 482.40 [7] - The company's market capitalization stands at HKD 3,724.8 billion [7] - Tencent's performance is compared to the Hang Seng Tech Index, with a recent underperformance of -17.00% [9]

事项： 腾讯控股即将发布 2024 年四季度业绩公告。 国信互联网观点： 2024Q4，我们预计腾讯实现营收 1692 亿元，同比增长 9%。预计三季度网络广告稳健增长，游戏业务在递 延影响下增速继续提升，金融科技业务受到宏观环境影响。具体来看： 证券研究报告 | 2025年01月19日 腾讯控股（00700.HK） 24Q4 前瞻：游戏加速增长，微信小店等带动广告潜力释放 |  | 公司研究·海外公司快评 | |  | 互联网·互联网Ⅱ | 投资评级：优于大市（维持）  | | --- | --- | --- | --- | --- | --- | | 证券分析师： | 张伦可 | 0755-81982651 | | zhanglunke@guosen.com.cn | 执证编码：S0980521120004 | | 证券分析师： | 陈淑媛 | 021-60375431 | | chenshuyuan@guosen.com.cn | 执证编码：S0980524030003 | ①游戏方面，预计流水递延下网络游戏业务收入为 470 亿元，同比增长 15%。预计国内游戏收入同比增长 17%。新游戏来看， ...

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HKD 492.22 [6][26] Core Views - Tencent's 4Q24 revenue is expected to grow by 8% YoY, with adjusted net profit increasing by 25% to RMB 53.5 billion [1] - Domestic gaming revenue is projected to accelerate by 18% YoY, while advertising revenue growth may slow to 13% due to the Olympics [1] - Financial technology revenue is expected to recover to 4% growth in 4Q24 [1] - Key catalysts for 2025 include the launch of new AI features, increased ad load rates on Video Accounts, and the expected monthly gross revenue of RMB 5-10 billion from the mobile game "Valorant" [1] Business Segments Advertising - 4Q24 advertising revenue growth is expected to slow to 13% YoY due to the Olympics and delayed recovery effects [2] - Ad load rates on Video Accounts have stabilized at 3-4%, with potential for further growth [2] - The integration of WeChat Mini Stores with public and private domain traffic is expected to drive GMV growth, with a projected GMV of RMB 500 billion in 2025 [2][11] Gaming - 4Q24 gaming revenue is expected to grow by 16% YoY, with domestic and overseas gaming revenue increasing by 18% and 13% respectively [3] - New game releases with longer deferred revenue cycles are expected to positively impact 4Q24 results [3] - Key games to watch include "DnF Mobile" and the upcoming "Honor of Kings: World" and "Valorant Mobile" [3] Financial Technology - Financial technology revenue is expected to grow by 4% YoY in 4Q24, driven by the recovery of offline payment services [2] - WeChat Search has started displaying products from WeChat Mini Stores, and the "Gift Sending" feature is expected to drive further growth [2][11] AI and Technological Innovations - Tencent is expected to launch new AI features in 2025, which could enhance mobile applications and improve user stickiness [1] - Tencent's AI-powered advertising tool, "Miaosi," has shown significant improvements in ad performance, with a 30% increase in Video Account ad spend during the Double 11 period [16] - Tencent's open-source MoE model, "Hunyuan Large," and 3D generation model, "Hunyuan 3D-1.0," are expected to drive innovation in AI applications [17][19] Financial Projections - Revenue forecasts for 2024-2026 have been slightly adjusted, with expected revenues of RMB 655.3 billion, RMB 712.8 billion, and RMB 785.1 billion respectively [4][22] - Adjusted net profit forecasts for 2024-2026 have been revised to RMB 220.9 billion, RMB 247.2 billion, and RMB 280.9 billion, reflecting high-margin business base effects [4][22] Valuation - The SOTP valuation for Tencent is HKD 492.22, based on a sum-of-the-parts analysis [26] - The valuation includes contributions from gaming, social networks, online advertising, financial technology, and enterprise services, with gaming contributing the largest share at 37.5% [26] Industry Comparison - Tencent's gaming and advertising businesses are compared to global peers, with Tencent's gaming PE at 14.2x, lower than the global average of 20.2x, and advertising PE at 13.8x, lower than the global average of 21.8x [26][28]

[Table_Page] 跟踪研究|媒体Ⅱ 证券研究报告 | [Table_Title] 【 广 发 传 媒 | 海 外 】 腾 讯 控 股 & | | --- | --- | | （00700.HK） | | 24Q4 前瞻：游戏提速，广告、金融韧性强 [Table_Summary] 核心观点： 盈利预测： 注：归母净利润和 EPS 均为 NonGAAP 口径； | [Table_ 单位Finance] :人民币亿元 | | 2022A | 2023A | 2024E | 2025E | 2026E | | --- | --- | --- | --- | --- | --- | --- | | 营业收入（百万元） | | 5,546 | 6,090 | 6,568 | 7,127 | 7,685 | | 增长率 （ ） | % | -1.0% | 9.8% | 7.9% | 8.5% | 7.8% | | EBITDA（百万元） | | 1,612 | 2,118 | 2,624 | 3,008 | 3,379 | | 净利润（百万元） | | 1,149 | 1,530 | 2,223 | 2,444 | ...

重点关注当下点位的腾讯控股700.HK --国证国际TMT 国证国际研究部 2025年01月14日 分析师： 汪阳Alex（中央編號：BIT765） alexwang@eif.com.hk 请参阅本报告尾部免责声明 Ø 事件：1月6日，美国国防部将腾讯控股列入"中国军事公司"清单（Chinese Military Companies List，简称CMC清 单）; Ø 腾讯控股700.HK之后，截至当下下跌约9%，最大回撤12%，周跌幅创下2023年12月以来的新低；同期恒生指数跌 1.73%，最大回撤4.5%；恒生科技指数跌张0.16%，最大回撤4.12%，显著跑输恒生指数和恒生科技指数。 Ø 地缘政治风险被低估：在 AI、网络安全、云 计算和 AR/VR 方面的大量投资（涉及）； Ø 以及与苹果合作的潜在延迟； Ø 增长担忧缺乏新品？ Ø 腾讯有这个技术，但供需双方均无必要： Ø 小米、中微公司、禾赛科技、旷视科技、中 国电信等公司都曾被列入，并且在更新的名 单中移除或者公司上诉后移除。 Ø 对腾讯业务的影响可能几乎不存在，但投资 者和市场情绪可以期待缓和； Ø 当下的腾讯股价并没有price in 到与 ...

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Investment Rating - Buy (Maintained) [2] Core Views - Tencent's e-commerce business is accelerating comprehensively, leveraging WeChat's social advantages and integrating private and public domain traffic [4][5][23] - WeChat's e-commerce ecosystem has seen rapid growth, with WeChat Shop GMV in 2024 being 1.92 times that of 2023, and order volume increasing by 2.25 times [4] - Tencent's organizational restructuring has elevated the e-commerce business, with WXG taking unified leadership, and the integration of video accounts, mini-programs, and public accounts [5][22] - Tencent's differentiated strategy focuses on social fission and innovative features like "gift-giving," which enhances user engagement without compromising the user experience [9][29] Financial Performance and Projections - Revenue is projected to grow from CNY 6,579 billion in 2024E to CNY 7,803 billion in 2026E, with a CAGR of 8.0% to 7.9% [18] - Net profit attributable to shareholders is expected to increase from CNY 2,247 billion in 2024E to CNY 2,803 billion in 2026E, with a CAGR of 9.1% to 14.4% [18] - Earnings per share (EPS) is forecasted to rise from CNY 24.36 in 2024E to CNY 30.38 in 2026E [18] E-commerce Business Development - Tencent's e-commerce journey has evolved from early explorations (2005-2012) to the current phase of comprehensive acceleration (2024-present) [5] - The integration of private and public domain traffic through WeChat Shop and mini-programs has been a key driver of growth [23] - Video accounts have become a significant platform for e-commerce, with daily active users surpassing Kuaishou in Q3 2022 [4] Competitive Landscape - Tencent's "gift-giving" feature is a unique social play, differentiating it from competitors like Taobao and Douyin, which have similar features but lack the same level of social integration [10][28][29] - Taobao's "gift-giving" feature, launched in January 2025, allows users to send gifts without entering a recipient's address, but still relies on external platforms like WeChat for sharing [10] - Douyin's "gift-giving" feature, primarily focused on group buying, has seen significant usage, with over CNY 1 billion in gifts sent by the end of 2024 [28] Organizational and Operational Strategies - Tencent has restructured its e-commerce business to streamline operations, with WXG leading the charge and integrating various teams like WeChat Pay and Tencent Advertising [5][22] - The company has introduced new tools and features for merchants, such as the WeChat Shop Assistant app and upgraded order entry points for users [23] - Tencent's focus on social fission and innovative marketing strategies, like the "gift-giving" feature, has been instrumental in driving user engagement and merchant participation [9][29] Market Positioning and Growth Potential - Tencent's e-commerce business is well-positioned for growth, with a strong foundation in private domain e-commerce and video accounts, now expanding to a comprehensive WeChat ecosystem [20][31] - The company's e-commerce growth is expected to enhance monetization across the WeChat ecosystem, including payment fees, in-loop advertising, and technical service fees for WeChat Shop [20] - Tencent's strong social moat, coupled with its gaming and video account businesses, continues to drive growth, with AI and e-commerce offering additional upside potential [20]

Investment Rating - The report maintains an "Outperform" rating for Tencent Holdings (00700 HK) [1] Core Views - Tencent's content and platform strengths position it well for leadership in the AI era [1][5] - Tencent Video and Tencent Literature Group demonstrate strong operational strategies and growth potential [3] - Tencent's AI and e-commerce initiatives leverage its data, social, and scenario advantages [4][6] Tencent Video - Tencent Video focuses on high-quality content with 9 S+ series launched in 2024 [3] - Membership business grows steadily with SVIP users increasing and ARPPU rising [3][11] - Innovative advertising strategies enhance ad effectiveness and broaden revenue channels [3][11] - AIGC capabilities integrated into animation production improve efficiency and quality [33] Tencent Literature Group - Tencent Literature maintains a leading position in online literature with 170k new authors and 320k new novels added in H1 2024 [12] - The "Farm-Factory-Park" IP development model drives cross-media success and global expansion [14][24] - AI translation technology supports globalization with 3 billion cumulative users on Webnovel and 6k translated works by Nov 2024 [14] AI and E-commerce - Tencent leverages its HPC and data processing capabilities to close the gap with global peers in AI [4][6] - WeChat's high daily usage (40-50 times) provides a strong foundation for AI-driven user engagement [4][6] - WeChat Shop integrates e-commerce components, enhancing data and user profiling for targeted advertising [4][25] - E-commerce ad monetization rate on WeChat is below 1%, with significant room for growth compared to competitors like Kuaishou (3%) and Douyin (6%) [17] Financial Projections - Adjusted net profit for 2024-2026 is projected at 2198/2482/2729 billion yuan, with PE valuations of 16/14/12x [20][31] - Revenue growth is expected at 9% in 2025 and 8% in 2026, with ROE improving to 20% in 2024 [22] Strategic Initiatives - Tencent's AI tools, such as "Yuanbao" and "ima," enhance user experience through multimodal capabilities and seamless integration with WeChat [25] - WeChat Shop's integration of online and offline commerce is expected to drive future growth [25]