Orient Securities·2024-08-22 01:39Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HKD 422.68 [2][4]. Core Insights - The report highlights that Tencent's Q2 performance exceeded expectations in gaming and advertising, with a forecast for continued growth in gaming revenue [12][25]. - The projected IFRS net profit for 2024-2026 is estimated at CNY 188.6 billion, CNY 218.4 billion, and CNY 245.4 billion, respectively, reflecting an upward revision due to better-than-expected advertising and investment income [2][19]. - Non-IFRS net profit for the same period is expected to be CNY 229.1 billion, CNY 266.5 billion, and CNY 298.4 billion [2]. Financial Performance Summary - Q2 2024 revenue reached CNY 161.1 billion, representing an 8% year-over-year increase and a 1% quarter-over-quarter increase [2][6]. - Gross margin for Q2 2024 was 53%, up 5.8 percentage points year-over-year and 0.7 percentage points quarter-over-quarter [2][6]. - Q2 2024 IFRS net profit was CNY 47.6 billion, an 82% increase year-over-year and a 14% increase quarter-over-quarter [2][6]. - Non-IFRS net profit for Q2 2024 was CNY 57.3 billion, a 53% increase year-over-year and a 14% increase quarter-over-quarter [2][6]. - Value-added services revenue for Q2 2024 was CNY 78.8 billion, a 6% increase year-over-year [2][6]. - Social network revenue for Q2 2024 was CNY 30.3 billion, a 2% increase year-over-year [2][6]. - Online advertising revenue for Q2 2024 was CNY 29.9 billion, a 20% increase year-over-year [2][6]. - Financial technology and enterprise services revenue for Q2 2024 was CNY 50.4 billion, a 4% increase year-over-year [2][6]. Future Projections - The report anticipates continued growth in gaming revenue driven by new game launches and the recovery of existing titles [2][19]. - The expected revenue for 2024 is CNY 661.3 billion, with a year-over-year growth rate of 8.6% [20]. - The projected operating profit for 2024 is CNY 206.7 billion, reflecting a 35.3% year-over-year growth [20].