Tianfeng Securities·2024-08-08 06:03Investment Rating - The investment rating for Tencent Holdings (00700) is "Buy" with a 6-month rating maintained [1]. Core Views - The report anticipates a recovery in overall performance with revenue growth expected to be +8% year-on-year for Q2 2024, and Non-IFRS net profit expected to grow by +36% year-on-year [1]. - The report highlights that the gaming segment is expected to see a continuous quarter-on-quarter acceleration, with both domestic and overseas game revenues projected to increase [1]. - The financial technology and enterprise services segment is expected to see a slight decline in growth due to macroeconomic factors, with revenue growth projected at +6% year-on-year [1]. Summary by Sections Overall Performance - Q2 2024 revenue is estimated at approximately 161.9 billion yuan, representing an 8% year-on-year increase, with gross profit expected to be around 85 billion yuan, a 20% increase year-on-year [1]. - Non-IFRS operating profit is projected to be about 57.3 billion yuan, a 25% year-on-year increase, with a Non-IFRS operating margin of 35.4% [1]. Gaming Segment - Domestic game revenue is expected to grow by +9.6% year-on-year, while overseas game revenue is projected to increase by +13% year-on-year [1]. - The new game "Dungeon & Warriors: Origin" is anticipated to significantly contribute to domestic game revenue, leading to a quarter-on-quarter acceleration over the next 3-4 quarters [1]. Advertising Segment - Advertising revenue is expected to grow by +19% year-on-year, with a gross margin projected to improve to 57.3% [1]. - The growth is attributed to healthy traffic growth on video accounts and the effective expansion of advertising [1]. Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services is expected to grow by +6% year-on-year, with a slight decline in growth rate due to macroeconomic factors [1]. - The gross margin for this segment has improved significantly from 27.1% in Q4 2021 to 45.6% in Q1 2024 [1]. Investment Recommendations - The report suggests that the high-margin incremental businesses will support continued gross margin improvement, with an upward revision of Non-IFRS net profit forecasts for 2024-2026 [1]. - The target price is maintained at 476 HKD, with the stock trading at a forecasted PE of 15x/13x/12x for 2024/2025/2026, indicating a relatively low valuation compared to historical averages [1].