HTSC·2024-08-15 08:03Investment Rating - The investment rating for Tencent Holdings is maintained as "Buy" with a target price of HKD 465.35 [4]. Core Insights - Tencent's 2Q revenue grew by 8.0% year-on-year to HKD 161.1 billion, aligning with market expectations. Adjusted net profit increased by 52.6% year-on-year to HKD 57.3 billion, exceeding market forecasts by 19.0% [14][20]. - The company anticipates a slowdown in advertising growth in the second half of the year, leading to downward adjustments in advertising and fintech forecasts [2][15]. - Game revenue continues to accelerate, with strong performance both domestically and internationally, particularly from the mobile game "Dungeon & Fighter" [11][27]. Revenue Breakdown - Value-added services (VAS) revenue increased by 6.2% year-on-year, surpassing market expectations by 0.8%. The online advertising segment saw a 19.5% year-on-year increase, exceeding market expectations by 2.2% [14][20]. - The fintech and business services segment reported a 3.7% year-on-year growth, which was below market expectations [16][20]. - Domestic game revenue grew by 9% year-on-year, with expectations for "Dungeon & Fighter" to generate a total revenue of HKD 15-18 billion over the next 12 months [11][16]. Advertising and Market Share - The video account feature has significantly contributed to market share expansion, with video account advertising revenue growing over 80% year-on-year [20]. - Tencent's advertising technology upgrades are expected to enhance efficiency and precision in ad placements, potentially driving long-term growth in click-through rates (CTR) and advertising revenue [7][20]. - The company plans to upgrade its video account store to WeChat store, simplifying the merchant onboarding process and enhancing product visibility across various WeChat scenarios [7][24]. Future Outlook - For the years 2024-2026, Tencent's revenue forecasts have been adjusted downwards by -1.3%, -2.4%, and -1.7% respectively, primarily due to a slowdown in advertising revenue and fintech growth [35]. - The adjusted net profit forecasts for the same period are also revised downwards by -1.8%, -0.5%, and +1.5% to HKD 214.4 billion, HKD 247.7 billion, and HKD 283.9 billion respectively [35].