2024-08-18 02:09Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [3][27]. Core Views - Tencent's Q2 2024 revenue reached 161.1 billion RMB, a year-on-year increase of 8%, aligning with expectations; adjusted operating profit grew by 27% to 58.4 billion RMB, and adjusted net profit surged by 53% to 57.3 billion RMB, significantly exceeding Bloomberg consensus of 48.7 billion RMB [3][27]. - The report highlights the resilience of Tencent's advertising revenue, which grew by 19% year-on-year in Q2, driven by user traffic growth and enhanced advertising technology [7][27]. - The overall gross margin for Q2 was 53.3%, marking a historical high, with core business margins also improving [8][27]. Summary by Sections Financial Performance - Tencent's revenue for 2024 is projected to be 664.2 billion RMB, with a year-on-year growth rate of 9.1% [21]. - The adjusted net profit forecast for 2024 is 214.9 billion RMB, reflecting a 36.3% increase compared to 2023 [21][27]. Market Position - Tencent has repurchased 61.4 billion HKD worth of shares as of July 12, 2024, indicating strong capital return strategies [6][32]. - The competitive landscape for internet companies remains favorable, with high growth certainty in gaming and increasing contributions from e-commerce and AI [6][27]. Business Segments - Domestic game revenue grew by 9% year-on-year, with flagship titles showing recovery and new games contributing positively [26][27]. - Financial technology and enterprise services revenue increased by 4% year-on-year, with enterprise services showing robust growth despite challenges in financial services [27]. Valuation - The target market capitalization has been adjusted from 45,266 billion RMB to 42,854 billion RMB, with a target price set at 504 HKD, indicating a potential upside of 35% [27].