2024-08-15 08:09Investment Rating - The report maintains a "Buy" rating with a target price of HKD 460, reflecting an optimistic outlook for the company's profitability improvement and share buyback support [50]. Core Insights - The company reported 2Q24 revenue of RMB 161.1 billion, a year-on-year increase of 8.0%, meeting market expectations. The gross margin improved by 5.8 percentage points to 53.3%, with adjusted net profit rising 52.6% year-on-year to RMB 57.3 billion, exceeding market expectations by 17.8% [2]. - Advertising revenue for 2Q24 reached RMB 29.9 billion, growing 19% year-on-year, driven by significant growth in video accounts and long video revenues, with video account advertising revenue increasing by over 80% [27]. - Domestic game revenue grew by 9% year-on-year to RMB 34.6 billion, with strong contributions from titles like "Valorant" and "Dungeon & Fighter: Origin" [34]. Financial Performance Summary - The company’s revenue for FY22 was RMB 554.6 billion, projected to grow to RMB 656.1 billion in FY24E and RMB 768.0 billion in FY26E [35]. - Adjusted net profit for FY22 was RMB 115.6 billion, expected to rise to RMB 209.3 billion in FY24E and RMB 252.1 billion in FY26E [35]. - The gross profit margin is projected to improve from 43.1% in FY22 to 53.6% in FY26E, indicating a positive trend in profitability [35].