Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HKD 430 [1]. Core Insights - Tencent's Q3 2024 performance exceeded expectations, with a Non-IFRS net profit of CNY 598.13 billion, a year-on-year increase of 33%, surpassing the Bloomberg consensus estimate of CNY 543.69 billion [1]. - The company's revenue for Q3 2024 was CNY 1,672 billion, reflecting an 8% year-on-year growth, slightly below expectations [1]. - The report highlights the resilience of Tencent's advertising business and the strong performance of its gaming segment, particularly in the domestic market [1]. Financial Performance - Non-IFRS net profit for Q3 2024 was CNY 598.13 billion, with a Non-IFRS net profit margin of 35.8%, up 6.7 percentage points year-on-year [36]. - The company's tax expenses were CNY 89 billion, significantly lower than the expected CNY 124.2 billion, contributing to the net profit growth [36]. - Tencent's revenue from value-added services reached CNY 827 billion, a 9.17% increase year-on-year, driven by strong performance in domestic gaming [45]. WeChat Ecosystem - The WeChat ecosystem continues to grow, with a combined monthly active user count of 1.38 billion, a 3% year-on-year increase [58]. - WeChat's mini-programs achieved a transaction volume exceeding CNY 2 trillion, reflecting over a 10% year-on-year growth [59]. - The introduction of WeChat Shops is expected to enhance sales conversion rates and provide a standardized trading environment for merchants [63]. Gaming Segment - Domestic gaming revenue for Q3 2024 was CNY 373 billion, a 14% year-on-year increase, driven by flagship games like "Honor of Kings" and "Peacekeeper Elite" [66]. - The overseas gaming revenue was CNY 145 billion, a 9% year-on-year increase, although slightly below expectations due to extended revenue deferral periods [75]. - The report anticipates continued growth in the gaming segment, supported by new product launches and the ongoing success of established titles [66]. Social Network and Marketing Services - Social network revenue for Q3 2024 was CNY 309 billion, a 4% year-on-year decline, primarily due to decreased revenue from music and game live streaming services [79]. - Marketing services revenue reached CNY 300 billion, a 17% year-on-year increase, benefiting from the growth of mini-programs and increased advertising spending within the WeChat ecosystem [45][79]. - The report expects the marketing services segment to continue delivering above-industry growth due to the low base effect and the expansion of WeChat's advertising capabilities [79].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [5][24]. Core Insights - Tencent's Q3 2024 revenue reached 167.2 billion RMB, with a year-over-year (YoY) growth of 8% and a quarter-over-quarter (QoQ) growth of 4%, slightly below Bloomberg consensus expectations of 167.9 billion RMB. The Non-GAAP net profit attributable to shareholders was 59.8 billion RMB, reflecting a YoY increase of 33% and a QoQ increase of 4%, surpassing consensus expectations of 54.4 billion RMB [1][2]. Summary by Relevant Sections Financial Performance - Q3 2024 gaming revenue was 51.8 billion RMB, showing a YoY increase of 13% and a QoQ increase of 7%. Domestic game revenue grew by 14%, driven by titles such as "Valorant," "Honor of Kings," "Peacekeeper Elite," and "Dungeon & Fighter: Origin." International game revenue increased by 9%, with strong performances from "PUBG Mobile" and "Brawl Stars" [2][12]. - Social network revenue for Q3 2024 was 30.9 billion RMB, with a YoY increase of 4% and a QoQ increase of 2% [2]. - Online advertising revenue reached 30 billion RMB, reflecting a YoY increase of 17% and a QoQ increase of 0%. Demand from advertisers in video accounts, mini-programs, and search services contributed to this growth [2][13]. - Financial and enterprise services revenue was 53.1 billion RMB, with a YoY increase of 2% and a QoQ increase of 5%. Financial services revenue remained stable YoY, while enterprise services revenue grew due to merchant technology service fees [2][12]. Earnings Forecast and Valuation - The report forecasts Tencent's revenue for 2024 and 2025 to be 657.9 billion RMB and 713.0 billion RMB, respectively, with YoY growth rates of 8.0% and 8.4%. Adjusted net profit is expected to be 221.8 billion RMB and 244.4 billion RMB, reflecting growth rates of 45.0% and 10.2% [3][24]. - The estimated fair value based on the Sum-of-the-Parts (SOTP) valuation method is 485.21 HKD per share [5][24]. Business Segments Valuation - The core business valuation is estimated at 4.08 trillion HKD, with gaming business valued at 1.77 trillion HKD, marketing services at 973.9 billion HKD, and financial and enterprise services at 1.23 trillion HKD [24][23].

Investment Rating - The investment rating for Tencent Holdings (0700.HK) is "Buy" and is maintained [5]. Core Insights - Tencent reported Q3 2024 revenue of 167.2 billion, representing an 8% year-on-year increase and a 4% quarter-on-quarter increase. Operating profit reached 53.3 billion, up 20% year-on-year and 5% quarter-on-quarter. Non-IFRS net profit attributable to shareholders was 59.8 billion, reflecting a 33% year-on-year increase and a 4% quarter-on-quarter increase [2][6]. Summary by Sections Revenue Performance - The revenue growth was driven by stable performance from evergreen games and the addition of new games, leading to accelerated revenue growth in both domestic and overseas markets. Domestic game revenue grew 14% year-on-year to 37.3 billion, while overseas game revenue increased 9% year-on-year to 14.5 billion [7]. Advertising and AI Impact - Advertising revenue showed strong growth, with marketing services revenue increasing 16.6% year-on-year to 30 billion, supported by AI enhancements and the upcoming Paris Olympics boosting brand advertising [7]. Profitability and Margins - Tencent's gross margin remained high at 53.1%, with notable increases in gross margins across various segments. However, marketing service margins saw a slight decline due to rising content costs [8]. Future Outlook - The value of the WeChat ecosystem continues to manifest, with expectations for sustained high profit margins. The ongoing advancements in AI are anticipated to inject continuous growth momentum into the company [9].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (00700) with a target price of 404.2 HKD [1] Core Views - Tencent's 3Q2024 revenue increased by 8% YoY, with Non-IFRS operating profit up 19% YoY, showing a multiplier effect where profit growth outpaces revenue growth [1] - Non-IFRS net profit attributable to shareholders rose 33% YoY, exceeding Bloomberg estimates by 10% [1] - The company's gross margin improved by 3.6 percentage points YoY, while operating expenses increased by 12% YoY, slightly above expectations but still at a relatively low rate [1] Business Segments Online Games - Online game revenue grew 13% YoY in 3Q2024, driven by domestic titles such as "Valorant," "Honor of Kings," "Peacekeeper Elite," and "Dungeon & Fighter: Origin" [1] - Domestic game revenue increased 14% YoY, slightly above expectations, while overseas game revenue grew 9% YoY (11% on a constant currency basis), slightly below expectations [1] - The company expects game revenue growth to accelerate further in 4Q2024, with a focus on the integration of "Dungeon & Fighter: Origin" and a major content update planned for the Chinese New Year [1] Advertising Services - Advertising revenue increased 17% YoY in 3Q2024, in line with expectations, driven by growth in gaming and e-commerce ad spending [1] - Video ad revenue grew over 60% YoY, with ad load rates still significantly lower than peers, indicating room for further inventory expansion [1] - Search ad revenue grew over 100% YoY, benefiting from improved search relevance through LLM capabilities [1] Fintech and Business Services (FBS) - FBS revenue grew 2% YoY in 3Q2024, in line with expectations but slightly below Bloomberg estimates [1] - Payment TPV growth rebounded in October, with GPU-related cloud revenue now accounting for a double-digit percentage of IaaS cloud revenue, indicating growing contributions from AI-driven computing demand [1] Investment Recommendation - The report raises the forecast for Non-IFRS net profit attributable to shareholders for 2024-2026 to 2281/2649/2940 billion yuan (previously 2178/2517/2786 billion yuan), representing YoY growth of 45%/16%/11% [1] - As of 2024/11/17, Tencent's stock price corresponds to 2024/2025/2026 forecast P/E ratios of 15x/12x/11x, with the 12-month Bloomberg forward P/E below the 5-year median by 1.1 standard deviations, indicating relatively low valuation [1] - The report expects accelerated game growth, improved advertising and financial services performance, and potential share buybacks to support valuation recovery, maintaining a "Buy" rating [1]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [5] Core Views - Tencent's Q3 2024 revenue reached RMB 167.19 billion, representing a year-over-year increase of 8% and a quarter-over-quarter increase of 4%. The gross margin was 53%, up 4 percentage points year-over-year but down 0.2 percentage points quarter-over-quarter [2] - The net profit attributable to shareholders (IFRS) for Q3 2024 was RMB 53.23 billion, a significant year-over-year increase of 47% and a quarter-over-quarter increase of 12%. The non-IFRS net profit was RMB 59.81 billion, up 33% year-over-year and 4% quarter-over-quarter [2] - The report anticipates continued growth in gaming revenue, driven by a low base in Q4 2023 and the longer revenue recognition cycle for overseas income. The gaming revenue is expected to maintain its growth momentum into Q1 2025 [2][3] Summary by Sections Financial Performance - Q3 2024 value-added services revenue was RMB 82.70 billion, up 9% year-over-year and 5% quarter-over-quarter. International gaming revenue was RMB 14.5 billion, also up 9% year-over-year, while domestic gaming revenue was RMB 37.3 billion, up 14% year-over-year [2] - Social network revenue grew by 4% to RMB 30.9 billion, supported by mobile game virtual item sales and music subscription revenue, although partially offset by declines in music and game live streaming services [2] - Q3 2024 advertising revenue was RMB 30 billion, a 17% year-over-year increase, driven by strong demand for advertising inventory from video accounts, mini-programs, and WeChat search [2] Future Projections - The report projects IFRS net profits for 2024, 2025, and 2026 to be RMB 195.13 billion, RMB 224.53 billion, and RMB 249.81 billion respectively, with non-IFRS net profits expected to be RMB 228.64 billion, RMB 261.49 billion, and RMB 291.44 billion [3] - The target price is set at HKD 528.62, with a current share price of HKD 404.2 [5]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [1] Core Insights - The company reported a significant profit exceeding expectations, with a notable increase in gross margin by 6.85 percentage points in its financial technology segment [1][4] - Revenue growth remains strong, with a year-over-year increase of 12.1% in Q3 2024, reaching 167.2 billion RMB, although slightly below Bloomberg consensus expectations [1][20] - Non-IFRS net profit for the same quarter was 59.813 billion RMB, reflecting a year-over-year growth of 33.2%, surpassing Bloomberg consensus [1][20] Summary by Sections Revenue Growth and Profitability - The company achieved total revenue of 167.2 billion RMB in Q3 2024, a year-over-year increase of 12.1%, slightly below the expected 167.9 billion RMB [1][20] - The non-IFRS net profit was 59.813 billion RMB, up 33.2% year-over-year, exceeding the expected 54.4 billion RMB [1][20] Gaming Performance - Domestic gaming revenue reached 37.3 billion RMB, growing 14.1% year-over-year, while international gaming revenue was 14.5 billion RMB, up 9% year-over-year [2][24] - The growth in international gaming was driven by strong performances from titles like PUBG MOBILE and VALORANT, which saw a 30% increase in revenue [2][24] Advertising Revenue - Advertising revenue was 30 billion RMB, reflecting a year-over-year increase of 17%, driven by strong demand from advertisers on various platforms [3][30] - The gross margin for advertising increased to 52.99%, up 0.71 percentage points year-over-year [3][30] Financial Technology and Enterprise Services - Financial technology and enterprise services revenue was 53.1 billion RMB, a 2% year-over-year increase, although below the expected 54.1 billion RMB [3][34] - The gross margin for this segment improved to 47.79%, up 6.85 percentage points year-over-year, driven by growth in wealth management services [3][34] Operational Data Growth - The combined monthly active users (MAU) for WeChat reached 1.382 billion, a 3% year-over-year increase, while QQ's MAU was 571 million, a 1% increase [3][36] Margin Improvement - Overall gross margin for Q3 2024 was 53.36%, up 3.87 percentage points year-over-year, attributed to growth in high-margin revenue sources [3][40] - The gross margin for value-added services was 57.45%, reflecting growth in both domestic and international gaming revenues [3][40] Expense Trends - Sales expenses increased by 18.9% year-over-year, primarily due to increased marketing efforts for new games [3][42] - Management expenses rose by 10.5% year-over-year, driven by higher R&D and employee costs [3][42] Earnings Forecast and Rating - The adjusted net profit forecast for 2024-2026 was raised to 217.4 billion, 240.6 billion, and 265.3 billion RMB respectively, with corresponding PE ratios of 16, 14, and 13 times [4][47] - The report emphasizes the company's strong business moat and ecosystem, maintaining the "Buy" rating [4][47]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [5] Core Views - Tencent's Q3 2024 revenue reached RMB 167.19 billion, representing a year-over-year increase of 8% and a quarter-over-quarter increase of 4%. The gross margin was 53%, up 4 percentage points year-over-year but down 0.2 percentage points quarter-over-quarter [2][3] - The net profit attributable to shareholders (IFRS) for Q3 2024 was RMB 53.23 billion, a significant year-over-year increase of 47% and a quarter-over-quarter increase of 12%. The non-IFRS net profit was RMB 59.81 billion, up 33% year-over-year and 4% quarter-over-quarter [2][3] - The report anticipates continued growth in gaming revenue, driven by a low base in Q4 2023 and the expected performance of new game versions in early 2025 [2][3] Summary by Sections Revenue Breakdown - Value-added services revenue for Q3 2024 was RMB 82.70 billion, up 9% year-over-year and 5% quarter-over-quarter. International gaming revenue was RMB 14.5 billion, also up 9% year-over-year, while domestic gaming revenue was RMB 37.3 billion, up 14% year-over-year [2] - Social network revenue grew by 4% to RMB 30.9 billion, supported by mobile game virtual item sales and music subscription revenue, although offset by declines in music and game live streaming services [2] Advertising and Financial Services - Online advertising revenue for Q3 2024 was RMB 30.0 billion, a 17% increase year-over-year, driven by strong demand for advertising inventory from video accounts, mini-programs, and WeChat search [2] - Financial technology and enterprise services revenue was RMB 53.09 billion, up 2% year-over-year and 5% quarter-over-quarter, with growth in wealth management services offset by a decline in payment services due to weak consumer spending [2] Profit Forecast and Valuation - The report projects IFRS net profit for 2024-2026 to be RMB 195.13 billion, RMB 224.53 billion, and RMB 249.81 billion respectively, with non-IFRS net profit expected to be RMB 228.64 billion, RMB 261.49 billion, and RMB 291.44 billion [3] - A sum-of-the-parts (SOTP) valuation method is used, resulting in a target price of HKD 528.62, maintaining the "Buy" rating [3]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [5] Core Views - Tencent reported a revenue of 167.2 billion RMB for Q3 2024, representing an 8% year-on-year increase. The adjusted net profit attributable to shareholders was approximately 59.8 billion RMB, a significant 33% increase compared to the previous year, exceeding Bloomberg's consensus estimate of 54.4 billion RMB [2][4] - The gaming sector is experiencing a strong product cycle, with domestic game revenue increasing by 14% to 37.3 billion RMB, driven by titles such as "Valorant," "Honor of Kings," and "Peacekeeper Elite." International game revenue grew by 9% to 14.5 billion RMB, supported by strong performances from "PUBG MOBILE" and "Brawl Stars" [3] - The advertising revenue saw a 17% increase to 30 billion RMB, fueled by strong demand for ads on video accounts, mini-programs, and WeChat search, along with the branding boost from the Olympics [4] Summary by Sections Financial Performance - Q3 2024 revenue breakdown: Gaming (51.8 billion RMB), Social Networks (30.9 billion RMB), FinTech and Enterprise Services (53.1 billion RMB), Advertising (30 billion RMB) [2] - Adjusted net profit for Q3 2024 was 59.8 billion RMB, with significant contributions from equity method investments and a reduced effective tax rate of 14% [2][3] Business Segments - Gaming: Domestic revenue increased by 14% to 37.3 billion RMB, while international revenue grew by 9% to 14.5 billion RMB. The company expects higher international game revenue to reflect in Q4 and next year's figures [3] - FinTech and Enterprise Services: Revenue growth slowed, with payment transaction volume increasing by about 10%, but average transaction value declined [3] - Advertising: Revenue increased by 17% to 30 billion RMB, with significant growth potential in video account ads and WeChat search ads [4] Future Projections - Revenue forecasts for 2024-2026 are 657.3 billion RMB, 702.3 billion RMB, and 752.0 billion RMB, respectively. Non-GAAP net profit estimates are approximately 223.5 billion RMB, 243.1 billion RMB, and 266.2 billion RMB for the same period [4][8]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The report highlights that Q3 revenue was 167.19 billion (YoY +8.1%, QoQ +3.8%), slightly below consensus expectations [2] - Gross profit reached 88.83 billion (YoY +16.1%, QoQ +3.4%), also slightly below consensus [2] - Net profit was 53.23 billion (YoY +47.1%, QoQ +11.8%), exceeding consensus by 17.4% [2] - The report emphasizes stable growth in domestic long-term games and incremental growth from overseas games, with domestic game revenue at 37.3 billion (YoY +14%) driven by titles like "Valorant" and "Honor of Kings" [2] - Marketing business revenue was 30 billion (YoY +16.6%), surpassing consensus expectations [2] Summary by Sections Financial Performance - Q3 revenue was 167.19 billion, slightly missing consensus by 0.4% [2] - Gross profit was 88.83 billion, missing consensus by 0.8% [2] - Net profit was 53.23 billion, beating consensus by 17.4% [2] - The company expects net profits (Non-IFRS) for 2024/25/26 to be 220.80 billion, 238.91 billion, and 260.27 billion respectively [2] Business Segments - Value-added services (VAS) showed a gross margin of 57.5%, exceeding Bloomberg consensus of 56.7% due to growth in gaming revenue [2] - Marketing business gross margin was 53%, below Bloomberg consensus of 56% [2] - Financial technology revenue was 53.1 billion (YoY +2%), slightly below consensus of 54.06 billion [2] Future Outlook - The report anticipates continued growth in gaming and advertising, maintaining a "Buy" rating based on the company's long-term competitive advantages [2]

Investment Rating - The report maintains a "Buy" rating with a target price of HKD 520.00, representing a potential upside of approximately 28.8% from the current price of HKD 403.80 [2][17]. Core Insights - The report highlights strong growth in the gaming sector, particularly in domestic games, driven by titles such as "Dungeon & Fighter Mobile" and other flagship games, with a projected 4Q24 year-on-year growth of 16% for both domestic and international games [2][14]. - The advertising segment continues to show robust growth, with a year-on-year increase of 17%, supported by WeChat features [2][10]. - The report notes a significant increase in net profit, with a year-on-year growth of 33% in 3Q24, surpassing previous forecasts [2][10]. Financial Performance Summary - The total net revenue for 3Q24 was RMB 167.19 billion, reflecting an 8% year-on-year increase [10]. - The gaming revenue for 3Q24 reached RMB 51.80 billion, with a 13% year-on-year growth, and domestic games grew by 14% [10]. - The report projects a total revenue of RMB 658.95 billion for 2024, with a slight adjustment reflecting a 0% change from previous estimates [15]. Revenue Breakdown - Domestic mobile game revenue is expected to reach RMB 131.79 billion in 2024, showing a 9.5% year-on-year increase [8]. - The report indicates that the advertising segment's gross margin has slightly decreased, while the overall revenue structure is shifting towards higher-margin businesses [14][15]. - The financial technology and enterprise services segment is projected to grow by 2% year-on-year in 4Q24, indicating a stable performance despite market challenges [10][14]. Earnings Per Share (EPS) Forecast - The report updates the EPS forecast for 2024 to RMB 22.82, reflecting a 1% increase from previous estimates [2][15]. - For 2025, the EPS is projected to be RMB 25.46, a 3% increase from earlier forecasts [2][15]. - The 2026 EPS forecast is set at RMB 28.32, also reflecting a 3% increase [2][15].