Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [1] Core Insights - Tencent's Q3 2024 revenue reached 167.2 billion RMB, representing an 8% year-over-year increase and a 4% quarter-over-quarter increase. Operating profit was 53.3 billion RMB, up 20% year-over-year and 5% quarter-over-quarter. Net profit attributable to shareholders was 53.2 billion RMB, reflecting a 47% year-over-year increase and a 12% quarter-over-quarter increase [1][11][18] - The gaming revenue accelerated with a 13% year-over-year growth, driven by both domestic (14%) and international (9%) markets. The deferred revenue reached a record high, indicating strong future revenue potential [30][31] - The marketing services business grew by 17% year-over-year, supported by demand for advertising on platforms like WeChat and mini-programs, demonstrating resilience in the advertising sector despite macroeconomic pressures [47][48] Summary by Sections Financial Performance - Q3 2024 overall gross margin increased by 3.6 percentage points year-over-year, remaining stable quarter-over-quarter. Non-IFRS operating profit grew by 19% year-over-year, while Non-IFRS net profit increased by 33% to 59.8 billion RMB [18][22] - Free cash flow for the quarter was 58.5 billion RMB, significantly up from 40.4 billion RMB in the previous quarter, indicating strong cash generation capabilities [27] Business Segments Value-Added Services - Gaming revenue for Q3 2024 was 51.8 billion RMB, accounting for 31% of total revenue, with a year-over-year growth of 13%. The deferred revenue balance reached 113.1 billion RMB, a 23% increase year-over-year [30][31] - The social network segment reported a 4% year-over-year increase in revenue, driven by sales of virtual goods and subscription services [41] Marketing Services - Marketing services revenue increased to 30 billion RMB, a 17% year-over-year growth, driven by demand for video ads and mini-programs [47] - The video account advertising revenue saw over 60% year-over-year growth, indicating strong demand and potential for further monetization [48] Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services grew by 2% year-over-year to 53.1 billion RMB, with growth in wealth management services offsetting declines in payment services due to weak consumer spending [49] - The cloud business is expected to continue growing, supported by the launch of new AI models and improved operational efficiencies [49][52] Shareholder Returns - Tencent plans to repurchase over 100 billion HKD worth of shares in 2024, which, along with cash dividends, is expected to provide strong support for the stock price [53] Earnings Forecast - The report projects revenues for FY2024-2026 to be 654.5 billion RMB, 699.1 billion RMB, and 747.9 billion RMB respectively, with Non-IFRS net profits of 223.3 billion RMB, 251.8 billion RMB, and 275 billion RMB [54]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [11][13]. Core Insights - Tencent's Q3 2024 revenue reached 167.2 billion RMB, a year-on-year increase of 8%, aligning with consensus expectations. Adjusted net profit was 59.8 billion RMB, up 33% year-on-year, exceeding consensus by 10% [11]. - The report highlights that domestic game revenue grew by 14% year-on-year, while overseas game revenue increased by 9% [8]. - Advertising revenue saw a 17% year-on-year growth, driven by the performance of video accounts and AI enhancements [9]. - Financial technology and enterprise services revenue grew by 2% year-on-year, with payment income declining but expected to recover partially in Q4 [12]. - The report emphasizes Tencent's strong fundamentals, competitive landscape, and growth drivers from gaming and AI, with a target market capitalization adjustment from 47,190 billion RMB to 48,013 billion RMB, corresponding to a target price of 560 HKD [13]. Financial Summary - Revenue projections for Tencent are as follows: - 2022: 554.6 billion RMB - 2023: 609 billion RMB - 2024E: 657.9 billion RMB - 2025E: 723.4 billion RMB - 2026E: 780.3 billion RMB [7][19] - Adjusted net profit forecasts are: - 2024E: 224.7 billion RMB - 2025E: 245.1 billion RMB - 2026E: 280.3 billion RMB [7][19]. - The report indicates a significant increase in deferred revenue, with a year-on-year growth of 93% for non-current liabilities [8].

Investment Rating - The report assigns a rating of "Buy" for Tencent Holdings (0700) [1]. Core Insights - The third-quarter business performance is generally in line with expectations, with a recovery in gaming, smooth commercialization of video accounts, and short-term pressure on enterprise services. The company is expected to maintain high profit growth for the full year [3]. - The report anticipates that the integration of video accounts and WeChat stores will further enhance the WeChat ecosystem, driving advertising business growth. Deferred revenue from games is expected to gradually materialize, and enterprise services are likely to benefit from ecosystem openness [5]. Financial Summary - For FY24Q3, Tencent achieved operating revenue of 167.2 billion RMB, a year-on-year increase of 8.13%, which is in line with consensus expectations (167.9 billion RMB). Adjusted net profit reached 59.8 billion RMB, a year-on-year increase of 33.2%, significantly exceeding market expectations (54.4 billion RMB) [5]. - The gross profit margin for FY24Q3 was 53.1%, with year-on-year and quarter-on-quarter changes of +3.64% and -0.18%, respectively. The slight decline in the quarter was mainly due to a 2.65 percentage point decrease in advertising gross margin [5]. - The company expects to repurchase over 100 billion HKD worth of shares for the full year [5]. Segment Performance - Value-added services (VAS) revenue for FY24Q3 was 82.7 billion RMB, a year-on-year increase of 9.2%, with gaming revenue at 51.8 billion RMB, up 12.6%. Domestic and international gaming revenues were 37.3 billion RMB and 14.5 billion RMB, respectively [5]. - Social network revenue reached 30.9 billion RMB, a year-on-year increase of 3.9%, meeting expectations [5]. - Advertising revenue for FY24Q3 was 30 billion RMB, a year-on-year increase of 16.6%, with video account advertising revenue growing over 60% year-on-year [5]. - Enterprise services revenue for FY24Q3 was 53.1 billion RMB, a year-on-year increase of 2%, showing slower growth mainly due to overall macroeconomic impacts [5]. Operational Data - The WeChat ecosystem remains robust, with VAS paid user growth showing positive momentum. The number of WeChat and WeChat MAUs increased by 3% year-on-year [31]. - The number of paid accounts for value-added services increased by 9% year-on-year [31].

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].