TENCENT(00700) 国信证券·2024-08-16 00:37Investment Rating - The investment rating for the company is "Outperform the Market" [14][11][29] Core Views - The company's revenue growth is driven by strong performance in advertising and gaming sectors, with a notable increase in profit margins. In Q2 2024, the company achieved revenue of 161.1 billion yuan, a year-on-year increase of 8%, primarily from advertising and gaming contributions [11][5][12] - The report highlights the improvement in the revenue mix, with a higher proportion of high-margin businesses such as WeChat video accounts and mini-game platform service fees [6][11] - The company is expected to benefit from the release of more advertising inventory, particularly in video accounts, and the ongoing development of e-commerce within its ecosystem [12][25][29] Financial Forecasts and Metrics - Revenue (in million yuan) is projected to grow from 609,015 in 2023 to 791,335 in 2027, with annual growth rates decreasing from 9.8% in 2023 to 5.0% in 2027 [1] - Non-IFRS net profit is expected to rise from 157,688 million yuan in 2023 to 288,538 million yuan in 2027, with a significant growth rate of 36.4% in 2023, tapering to 4.9% by 2027 [1] - The adjusted EPS is forecasted to increase from 16.63 yuan in 2023 to 30.96 yuan in 2027 [1] - The EBIT margin is anticipated to improve from 28.7% in 2023 to 38.2% in 2027, indicating enhanced operational efficiency [1] - The company's price-to-earnings (P/E) ratio is projected to decrease from 20.3 in 2023 to 10.9 in 2027, suggesting a more attractive valuation over time [1] Revenue Breakdown - The gaming segment's revenue is expected to accelerate in the second half of 2024, with a 9% year-on-year increase in Q2 2024, driven by successful game launches and recovery in popular titles [12][39] - The advertising revenue for Q2 2024 reached 299 billion yuan, reflecting a 19% year-on-year growth, supported by upgraded advertising technology and increased demand for video account ads [12][24] - Financial technology and enterprise services revenue grew by 4% year-on-year to 504 billion yuan in Q2 2024, although it faced macroeconomic pressures [13][42] Profitability Insights - The adjusted operating profit for Q2 2024 was 58.4 billion yuan, a 27% increase year-on-year, with a Non-IFRS net profit margin of 35.6%, up 10 percentage points from the previous year [11][16] - The overall gross margin for the company improved to 53% in Q2 2024, with significant contributions from value-added services, online advertising, and financial technology sectors [17][18]