First Shanghai Securities·2024-08-22 06:23Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 55, representing a potential upside of 37.5% from the last closing price of HKD 40 [1]. Core Insights - The company's Q2 2024 performance exceeded market expectations, with revenue reaching RMB 30.9 billion (QoQ +5.3%, YoY +11.6%) and adjusted net profit at RMB 4.68 billion (QoQ +6.6%, YoY +73.7%), marking a historical high [1]. - The growth in online marketing revenue was significant, amounting to RMB 17.5 billion (QoQ +5.2%, YoY +22.1%), driven by improvements in advertising strategies and algorithms [1]. - E-commerce GMV for Q2 2024 was RMB 305.3 billion (QoQ +6.0%, YoY +15.0%), with a notable increase in the share of general merchandise GMV [1]. Financial Performance - The gross profit for Q2 2024 was RMB 17.1 billion, with a gross margin of 55.3%, up 5.1% year-on-year [1]. - The adjusted net profit margin reached 15.1%, indicating strong profitability despite challenges in e-commerce growth [1]. - The company reported a significant reduction in overseas losses, with overseas revenue of RMB 1.1 billion (QoQ +11.0%, YoY +141.4%) [1]. User Metrics - Daily active users (DAU) for Q2 2024 were 395 million (QoQ +0.4%, YoY +5.1%), while monthly active users (MAU) were 692 million (QoQ -0.8%, YoY +2.7%) [1]. - The average daily usage time per user was 122 minutes, reflecting a year-on-year increase of 4.3% [1]. Market Position - The company is positioned in the TMT (Technology, Media, and Telecommunications) sector, with a current market capitalization of HKD 174.1 billion [1]. - Major shareholders include Tencent, holding 15.7% of the company [1].