Ge Long Hui·2025-08-03 02:34Core Viewpoint - The company is expected to achieve significant revenue growth in Q2 2025, driven by strong performance in value-added services, particularly in gaming and online advertising sectors [1][2]. Financial Forecast - Projected revenue for Q2 2025 is 1799.3 billion yuan, representing a year-over-year increase of 11.7% [1]. - Anticipated gross profit is 990.8 billion yuan, with a gross margin of 55.1%, reflecting a year-over-year increase of 1.8 percentage points [1]. - Operating profit is forecasted at 587.2 billion yuan, a 15.7% increase year-over-year [1]. - Non-IFRS net profit is expected to reach 627.3 billion yuan, up 9.5% year-over-year, with a net profit margin of 34.9% [1]. Gaming Sector - Value-added services revenue is projected at 885.1 billion yuan, with gaming revenue at 566.8 billion yuan, showing a year-over-year increase of 16.9% [2]. - Domestic gaming revenue is expected to be 402.4 billion yuan, growing 16.3% year-over-year, supported by popular titles like "Honor of Kings" and "Peacekeeper Elite" [2]. - The game "Delta Action" is anticipated to contribute significantly to revenue growth, with updates expected to enhance its performance [2]. Advertising Services - Advertising revenue is projected at 356.5 billion yuan, reflecting a year-over-year increase of 19.3% [3]. - The overall Chinese internet advertising market is expected to grow by 6.8% in Q2 2025, indicating a robust performance relative to the industry [3]. - AI contributions are expected to enhance advertising effectiveness and user engagement, driving further growth in this segment [3]. Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services is expected to reach 536.9 billion yuan, with a year-over-year growth of 6.4% [3]. - The recovery in payment willingness is anticipated to improve commercial payment business performance [3]. Profitability and Valuation - The company is expected to maintain strong growth in core gaming and advertising revenues, with ongoing updates to existing games likely to boost revenue further [4]. - Non-IFRS net profit forecasts for 2025-2027 have been adjusted upwards, indicating a positive outlook for profitability [4]. - Current valuations suggest a Non-IFRS PE ratio of 18/16/15 for 2025-2027, with a target price set at 605 HKD [4].