ZHESHANG SECURITIES·2024-08-16 12:23Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [9] Core Insights - Domestic game revenue has turned positive year-on-year, with management focusing on internal profit acceleration [1][24] - The company achieved a revenue of 161.1 billion yuan in Q2 2024, representing an 8.0% year-on-year increase and a 1.0% quarter-on-quarter increase, aligning closely with Bloomberg consensus expectations [8] - Non-IFRS net profit for Q2 2024 reached 57.31 billion yuan, up 52.6% year-on-year and 14.0% quarter-on-quarter, exceeding Bloomberg consensus by 27.3% [29] Summary by Sections Revenue Performance - Social network revenue was 30.3 billion yuan, up approximately 2% year-on-year but down about 1% quarter-on-quarter, slightly below Bloomberg consensus [5] - Financial technology and enterprise services revenue was 50.4 billion yuan, a 3.7% year-on-year increase but down 3.6% quarter-on-quarter, falling short of Bloomberg consensus by 10.5% [6] - Online advertising revenue was 29.9 billion yuan, up 19.5% year-on-year and 12.7% quarter-on-quarter, exceeding Bloomberg consensus by 15.8% [12] Profitability Metrics - Gross margin for the company was 53.3%, an increase of 5.8 percentage points year-on-year and 0.7 percentage points quarter-on-quarter, surpassing Bloomberg consensus by 3.0 percentage points [29] - The company’s operating costs decreased by 4.0% year-on-year, primarily due to reduced long video content costs and optimized cloud project deployment costs [29] Future Projections - The company forecasts Non-IFRS net profits of 216.5 billion yuan, 247.9 billion yuan, and 279.2 billion yuan for 2024, 2025, and 2026 respectively, with year-on-year growth rates of 37.3%, 14.5%, and 12.7% [29] - The report estimates a target price of 456.5 HKD for 2025, indicating a potential upside of 23.9% from the current stock price [29]