Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The new game cycle and the commercialization of the WeChat ecosystem are expected to continue driving growth for the company [1][3] - The company achieved a revenue of 487.8 billion yuan in the first three quarters of 2024, representing a year-on-year increase of 7%, with a net profit of 142.7 billion yuan, up 62% year-on-year [3] - The report highlights strong performance in domestic gaming and marketing services, with significant contributions from popular games and advertising demand [3][5] Financial Performance Summary - For Q3 2024, the company reported revenue of 167.2 billion yuan (up 8% year-on-year) and a net profit of 53.2 billion yuan (up 47% year-on-year) [3] - The gross margin for Q3 2024 was 53% (up 4 percentage points year-on-year), driven by high-margin revenue growth from domestic gaming and video services [4] - The Non-IFRS net profit margin reached 35.8% in Q3 2024, an increase of 6.7 percentage points year-on-year [4] Growth Drivers - The company’s new games have shown strong performance, with titles like "DNF Mobile" consistently ranking at the top of the iOS sales charts [5] - The WeChat ecosystem's commercialization efficiency is improving, with the GMV of mini-programs exceeding 2 trillion yuan, reflecting a significant year-on-year growth [5] - The report anticipates continued revenue growth from new game launches and the expanding user base of the WeChat platform [5] Earnings Forecast - The earnings forecast for the company has been revised upwards, with expected net profits of 193 billion yuan, 217 billion yuan, and 236 billion yuan for 2024, 2025, and 2026 respectively [3] - Corresponding EPS estimates are 20.8 yuan, 23.4 yuan, and 25.5 yuan for the same years, with current price-to-earnings ratios of 17.9, 15.9, and 14.6 [3][6]

Investment Rating - The investment rating for the company is "Outperform the Market" [6][4]. Core Views - The company's revenue for Q3 2024 reached 167.1 billion RMB, a year-on-year increase of 8.1%, primarily driven by growth in advertising and gaming businesses, while the fintech sector showed weakness due to macroeconomic factors [7][4]. - Adjusted operating profit for Q3 2024 was 61.3 billion RMB, up 19% year-on-year, with Non-IFRS net profit at 59.8 billion RMB, reflecting a 33% increase [7][4]. - The company is expected to continue releasing high-margin business potential as WeChat traffic is optimized, with significant transaction volume facilitated by mini-programs exceeding 2 trillion RMB in Q3 2024 [8][4]. Summary by Sections Advertising Business - In Q3 2024, the company's online advertising revenue was 30 billion RMB, a 17% increase year-on-year, benefiting from enhanced internal transaction capabilities and technological upgrades [13][4]. - Video account marketing services saw revenue growth of over 60%, significantly enhancing WeChat's transaction capabilities [13][4]. Gaming Business - The company's gaming revenue for Q3 2024 was 51.8 billion RMB, a 13% year-on-year increase, with deferred revenue at 106.6 billion RMB, up 20% [11][4]. - Domestic gaming revenue rose 14% to 37.3 billion RMB, with strong performances from titles like "Valorant" and "Honor of Kings" [11][4]. Financial Technology and Enterprise Services - Revenue from fintech and enterprise services grew 2% year-on-year to 53.1 billion RMB, with payment revenue decline offset by growth in wealth management services [14][4]. Financial Forecasts - The company maintains its profit forecasts, expecting adjusted net profits of 219.8 billion RMB, 248.2 billion RMB, and 272.9 billion RMB for 2024, 2025, and 2026 respectively [4][4].

Investment Rating - The report assigns a "Buy" rating for Tencent Holdings with a target price of 540 HKD, indicating a potential upside of 33.9% from the last closing price [1][19]. Core Insights - Tencent's Q3 2024 performance exceeded market expectations, with revenue reaching 167.2 billion RMB, a year-on-year increase of 8% and a quarter-on-quarter increase of 4%. Net profit attributable to shareholders was 54 billion RMB, reflecting a significant year-on-year growth of 47% [1][2]. - The report highlights the effectiveness of Tencent's evergreen game strategy and the promising future of WeChat's small shop initiative, which is expected to enhance the company's e-commerce capabilities [1][14]. Revenue Overview - In Q3 2024, Tencent's revenue from value-added services was 82.7 billion RMB, up 9% year-on-year. Social network revenue grew by 4% to 29.7 billion RMB, driven by music subscription services and mobile game sales [2][3]. - The gaming segment reported domestic revenue of 32.7 billion RMB, a 14% increase year-on-year, primarily due to the success of "Honor of Kings" and "Peacekeeper Elite" [3][8]. - International gaming revenue reached 13.3 billion RMB, marking a 9% year-on-year increase, supported by titles like "PUBG MOBILE" [3][8]. Advertising and Marketing Services - The advertising business upgraded to marketing services, generating 30 billion RMB in Q3 2024, a 17% increase year-on-year, benefiting from growth in video accounts and WeChat search revenues [3][17]. - The report notes that the advertising loading rate is currently below industry standards but has significant growth potential as Tencent enhances its advertising technology [3][17]. Financial Technology and Enterprise Services - Financial technology and enterprise services revenue was 53 billion RMB, reflecting a 2% year-on-year increase. The growth in wealth management services offset declines in payment revenues [3][4]. - The gross margin for financial technology and enterprise services improved to 48%, driven by increased efficiency in cloud services and technology service fees [4]. Game Development Strategy - Tencent's focus on evergreen games aims to maintain player engagement and revenue over the long term. Key titles include "Honor of Kings" and "Peacekeeper Elite," which continue to show strong performance [8][9]. - The report emphasizes the importance of community interaction and continuous content updates in sustaining the success of these games [8][9]. E-commerce Initiatives - WeChat's small shop initiative is highlighted as a critical component of Tencent's e-commerce strategy, with expectations for significant growth as infrastructure and features are enhanced [14][15]. - The report indicates that the integration of WeChat's small shop with the broader ecosystem will facilitate better customer engagement and sales conversion [14][15]. Future Outlook - The report maintains a positive long-term outlook for Tencent's various business segments, anticipating continued robust growth driven by strategic initiatives and market expansion [19].

Investment Rating - The report maintains a "Buy" rating for Tencent (700.HK) and raises the target price to HKD 500, indicating a potential upside of 24% from the current price of HKD 403.80 [7][11][19]. Core Insights - Tencent's 3Q24 revenue reached RMB 167.2 billion, a year-on-year increase of 8.0%, aligning with market expectations. Adjusted net profit rose by 33% year-on-year to RMB 59.8 billion, exceeding market expectations by 10% [5][6]. - Domestic gaming revenue rebounded with a 14% year-on-year growth to RMB 37.3 billion, driven by flagship games like "Honor of Kings" and "Peacekeeper Elite." International gaming revenue also grew by 9% year-on-year to RMB 14.5 billion, supported by strong performances from "PUBG MOBILE" and "Brawl Stars" [6][7]. - The WeChat ecosystem continues to evolve, with advertising revenue increasing by 17% year-on-year to RMB 30 billion, primarily driven by video accounts and mini-programs. Financial technology and enterprise services revenue grew by 2% year-on-year to RMB 53.1 billion, although it fell short of expectations [7][8]. Financial Performance Summary - For FY24E, Tencent's revenue is projected to reach RMB 655.5 billion, with adjusted net profit expected to be RMB 212.5 billion, reflecting a growth rate of 34.8% [9][12]. - The gross margin improved by 3.6 percentage points year-on-year to 53.1%, while the adjusted net profit margin increased to 35.8%, showing improvements both year-on-year and quarter-on-quarter [5][6]. - Deferred revenue grew by 22% year-on-year, indicating strong future growth potential in gaming [6][7]. Market Position and Outlook - The report highlights Tencent's strong competitive position in the domestic gaming market and the ongoing enhancements in its WeChat ecosystem, which are expected to drive future growth [6][7]. - The target price adjustment reflects a positive outlook on Tencent's profitability and ongoing share buybacks, which are anticipated to provide strong support for the stock price [7][8].

Group 1 - The core viewpoint of the articles highlights Tencent's strong performance in various segments, with significant growth in value-added services and marketing services, alongside stable financial technology and enterprise services revenue [1][2] Group 2 - In Q3 2024, Tencent reported total revenue of 167.2 billion yuan, an 8% year-on-year increase [1] - Value-added services revenue reached 82.7 billion yuan, growing by 9% year-on-year [1] - Marketing services revenue was 30 billion yuan, driven by strong demand for advertising inventory in WeChat's ecosystem, including video accounts and mini-programs [1] - The transaction volume for mini-programs exceeded 2 trillion yuan, reflecting a year-on-year growth of over ten percentage points [1] Group 3 - Financial technology and enterprise services revenue amounted to 53.1 billion yuan, with a 2% year-on-year increase [1] - Payment revenue saw a decline, attributed to a decrease in average transaction amounts, although transaction volume grew by 10% year-on-year [1] - Tencent Cloud's international revenue experienced significant year-on-year growth, contributing to the increase in enterprise service revenue and gross profit [2]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HKD 513, representing a potential upside of 27.0% from the current price of HKD 403.80 [1][3]. Core Insights - Tencent's Q3 2024 performance showed robust revenue growth of RMB 167.2 billion, up 8% year-on-year and 4% quarter-on-quarter, aligning with market expectations. Key revenue drivers included gaming, social networks, and advertising, with respective growth rates of 13%, 4%, and 17% [1][2][3]. - The adjusted net profit for Q3 2024 reached RMB 59.8 billion, a 33% increase year-on-year, benefiting from high-margin businesses such as domestic gaming and video services [1][3]. - The report anticipates continued growth in Q4 2024, projecting an 8.2% year-on-year revenue increase, driven by domestic gaming and advertising [3]. Revenue and Profitability - Total revenue for Tencent is projected to grow from RMB 609.0 billion in 2023 to RMB 766.8 billion by 2026, with a compound annual growth rate (CAGR) of approximately 8.6% [4]. - The adjusted earnings per share (EPS) is expected to rise from RMB 16.33 in 2023 to RMB 28.35 in 2026, reflecting a strong growth trajectory [4]. - The report highlights a significant improvement in gross margin, which increased to 53% in Q3 2024, driven by cost optimization in cloud services and high-margin business growth [1][3][10]. Segment Performance - The gaming segment saw a 13% year-on-year revenue increase, with domestic games growing by 14% due to the successful launch of new titles and the recovery of existing games [2][6]. - Advertising revenue surged by 17%, fueled by strong demand for video ads and increased spending from the gaming and e-commerce sectors [2][3][15]. - Financial technology and enterprise services remained stable, with slight growth in enterprise service revenue, while payment services faced challenges due to consumer spending impacts [2][14]. Valuation Metrics - The current price corresponds to a price-to-earnings (P/E) ratio of 15.3 times for 2025, which is considered low compared to historical averages [3][4]. - The report suggests that Tencent's strong performance and shareholder returns exceeding RMB 100 billion annually justify the target price of HKD 513, based on a 20 times P/E ratio for 2025 [3][4].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings Limited (00700.HK) [1][10]. Core Insights - Tencent's net profit showed strong performance in Q3 2024, with revenue reaching 167.2 billion RMB, a year-on-year increase of 8%, aligning with Factset consensus expectations. Gross margin improved from 49% to 53%, driven by a higher proportion of high-margin businesses and enhanced profitability in cloud services [1]. - Non-IFRS net profit attributable to shareholders was 59.8 billion RMB, up 33% year-on-year, exceeding Factset consensus by 12%, primarily due to a 19% decrease in income tax expenses compared to the previous year [1]. - Domestic gaming business growth accelerated, with value-added services revenue at 82.7 billion RMB (up 9% year-on-year), and domestic game revenue reaching 37.3 billion RMB (up 14% year-on-year), supported by strong performances from established games and new releases [1]. - AI-driven advertising continues to empower growth, with marketing services revenue at 30 billion RMB (up 17% year-on-year), and search revenue more than doubling, benefiting from improved ad targeting through AI models [1]. - The mini-program ecosystem is expanding, with transaction volume reaching 2 trillion RMB in Q3 2024, and the recent upgrade of WeChat mini-stores is expected to enhance e-commerce capabilities [1]. - The company repurchased approximately 35.9 billion HKD worth of shares in Q3 2024, with plans to exceed 100 billion HKD in buybacks for the year [1]. Financial Summary - Revenue projections for 2024, 2025, and 2026 are 653.2 billion RMB, 721.4 billion RMB, and 791.8 billion RMB, respectively. Non-IFRS net profit estimates for the same years are 221.3 billion RMB, 240.7 billion RMB, and 264.9 billion RMB [2][5]. - Key financial metrics include a gross margin of 53% for 2024, with a projected increase to 54.7% in 2025 and 54.9% in 2026. Non-IFRS net profit margin is expected to be 33.9% in 2024, slightly decreasing in subsequent years [2][8]. - The company’s cash flow from operating activities is projected to be 308.4 billion RMB in 2024, increasing to 376.0 billion RMB by 2026 [6].

Investment Rating - The report maintains a "Recommend" rating for Tencent Holdings (0700 HK) [6] Core Views - Tencent's Q3 2024 revenue reached RMB 1672 billion, up 8% YoY, with gross profit of RMB 888 billion, up 16% YoY, and a gross margin of 53%, up 4 percentage points YoY [1] - Non-IFRS operating profit was RMB 613 billion, up 19% YoY, and Non-IFRS net profit was RMB 598 billion, up 33% YoY, with an adjusted net margin of 35 8%, up 7 percentage points YoY [1] - The report forecasts 2024 2025 2026 revenues of RMB 6586 7123 7702 billion, and Non-IFRS net profits of RMB 2230 2403 2583 billion, with adjusted P E ratios of 16X 14X 13X based on the closing price on November 14, 2024 [4] Value-Added Services - Value-added services revenue in Q3 2024 was RMB 827 billion, up 9% YoY [2] - Domestic games revenue was RMB 373 billion, up 14% YoY, with flagship games like "Honor of Kings" and "Peacekeeper Elite" showing steady growth [2] - International games revenue was RMB 145 billion, up 9% YoY, with "PUBG M" and "Brawl Stars" performing well, and "VALORANT" seeing over 30% YoY growth in key overseas markets [2] - Social networks revenue was RMB 309 billion, up 4% YoY, with music subscription revenue up 20% YoY and paid members reaching 119 million, up 16% YoY [2] Marketing Services - Marketing services revenue in Q3 2024 was RMB 300 billion, up 17% YoY, driven by strong demand for video accounts, mini-programs, and WeChat Search ads [3] - Video accounts marketing revenue grew over 60% YoY in Q3 2024, with long-term potential from increased ad load rates, AI-powered ad creation, and WeChat's internal ad ecosystem [3] - Mini-program transaction volume exceeded RMB 2 trillion in Q3 2024, up by double-digit percentages YoY [3] FinTech and Business Services - FinTech and business services revenue in Q3 2024 was RMB 531 billion, up 2% YoY [4] - FinTech revenue was flat YoY, with payment transaction volume up 10% YoY despite a decline in average transaction value [4] - Business services revenue and gross profit grew YoY, driven by increased cloud services revenue and higher e-commerce transaction volumes [4] - Tencent released an upgraded version of its foundational model, Tencent Hunyuan Turbo, in Q3 2024, which doubled training and inference efficiency while halving inference costs [4] Financial Projections - The report forecasts 2024 2025 2026 revenues of RMB 6586 7123 7702 billion, with growth rates of 8 1% 8 2% 8 1% respectively [5] - Adjusted net profits are projected to be RMB 222971 240262 258316 billion for 2024 2025 2026, with growth rates of 41% 8% 8% respectively [5] - EPS based on adjusted net profit is forecasted to be RMB 24 06 25 93 27 87 for 2024 2025 2026, with P E ratios of 16X 14X 13X [5] Balance Sheet and Cash Flow - Total assets are projected to grow from RMB 1756788 billion in 2024E to RMB 2128540 billion in 2026E, with cash and cash equivalents increasing from RMB 259882 billion to RMB 457531 billion over the same period [8] - Operating cash flow is forecasted to grow from RMB 232365 billion in 2024E to RMB 278297 billion in 2026E, driven by increased net profit and stable depreciation and amortization [9] - Net cash flow is expected to increase from RMB 87562 billion in 2024E to RMB 110957 billion in 2026E [9] Profitability and Valuation - Gross margin is projected to increase from 53 08% in 2024E to 54 74% in 2026E, with net margin remaining stable around 28 7% [10] - ROE is forecasted to decline slightly from 19 63% in 2024E to 17 12% in 2026E, while ROIC remains stable around 13% [10] - P B ratio is expected to decrease from 3 6X in 2024E to 2 7X in 2026E, reflecting improved valuation metrics [10]

Investment Rating - The investment rating for Tencent Holdings is maintained at "Buy" with a target price of HKD 505.43 [3][6]. Core Insights - Tencent's Q3 revenue grew by 8.1% year-on-year to RMB 167.2 billion, aligning with consensus expectations. The adjusted net profit increased by 33.2% year-on-year to RMB 59.8 billion, exceeding expectations by 11.4% due to improved investment income and tax rate [2][4]. - The company anticipates accelerated growth in gaming revenue for Q4, with the upcoming launch of the mobile game "DnF" during the Spring Festival in 2025 expected to act as a catalyst [2][4]. - Despite short-term macroeconomic factors potentially impacting Q4 advertising revenue, the growth of the video account feature is expected to help expand Tencent's market share [2][5]. Summary by Sections Financial Performance - Q3 value-added services revenue increased by 9.2% year-on-year to RMB 82.7 billion, surpassing market expectations. Online advertising revenue grew by 16.6% year-on-year, while fintech revenue saw a modest increase of 2.0% [4][5]. - The gross profit margin for value-added services, online advertising, and fintech improved by 1.9, 0.7, and 6.8 percentage points respectively [2][4]. Advertising Business - The advertising business is expected to face pressure in Q4 due to weak consumer spending, but the video account feature is anticipated to mitigate some of the negative impacts [5]. - Q3 advertising revenue grew by 16.6% year-on-year, exceeding consensus expectations, with a gross margin increase of 0.7 percentage points [5]. Profit Forecast and Valuation - Revenue forecasts for 2024-2026 have been adjusted downwards by 0.4%, 0.9%, and 0.9% respectively, primarily due to macroeconomic factors affecting advertising and payment revenue growth [6][22]. - Adjusted net profit estimates for 2024, 2025, and 2026 are revised to RMB 221.8 billion, RMB 250.8 billion, and RMB 285.9 billion, reflecting improvements in tax rates and strong performance in investment business [6][22]. Gaming Performance - Q3 gaming revenue continued to accelerate, with strong performances in both domestic and overseas markets. Upcoming game launches are expected to act as catalysts for future growth [4][14]. - The mobile game "Pokémon Unite" launched in November is anticipated to leverage Tencent's long-term operational capabilities in mobile gaming [17][18].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (00700.HK) [2] Core Views - The company's business shows resilience with impressive growth in gaming and advertising sectors [2] - The WeChat ecosystem is thriving, with significant advancements in AI deployment and commercial capabilities [2] - The gaming segment continues to grow healthily, with both domestic and international revenues showing positive trends [2] - Advertising revenue, particularly from video accounts, is experiencing high growth rates [2] - Financial technology and enterprise services are stable, with potential for recovery in the future [2] Summary by Sections Performance Overview - In Q3 2024, Tencent reported revenue of 167.2 billion yuan, a year-on-year increase of 8%, and a NON-IFRS net profit of 59.8 billion yuan, up 33% year-on-year [2] Business Analysis - WeChat's mini-program transaction volume exceeded 2 trillion yuan, reflecting a growth of over 10% year-on-year [2] - The gaming revenue reached 51.8 billion yuan in Q3 2024, marking a 13% increase year-on-year, with domestic game revenue at 37.3 billion yuan, up 14% [2] - Advertising revenue was 30 billion yuan, growing 17% year-on-year, with video account ads increasing by over 60% [2] - Financial technology and enterprise services revenue reached 53.1 billion yuan, a 2% increase year-on-year [2] Financial Forecasts and Valuation - Projected NON-IFRS net profits for 2024, 2025, and 2026 are 222.5 billion yuan, 252.6 billion yuan, and 275.2 billion yuan respectively [2] - The current stock price corresponds to a PE ratio of 15.57 for 2024, 13.71 for 2025, and 12.58 for 2026 [2]