TENCENT(00700) 华泰证券·2024-10-12 08:03Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HKD 495.00, up from the previous target of HKD 465.35 [3][6] Core Views - Tencent's 3Q revenue is expected to grow 9.3% YoY, with advertising revenue slowing to 16% YoY due to macroeconomic factors [3] - Long-term growth drivers include the potential launch of new games like "Honor of Kings: World" and "Dawn" in 2025, which could generate monthly revenues of RMB 1.5-2.5 billion [3] - Video account advertising load rates are expected to increase in 4Q, and the integration of WeChat Pay with Taotian could boost advertising and payment revenue CAGR by 3-4 percentage points from 2025-2026 [3][4] - Non-GAAP net profit forecasts for 2024-2026 have been revised upward by 0.9%, 1.1%, and 0.5% to RMB 216.3 billion, RMB 250.3 billion, and RMB 285.2 billion, respectively [3] Financial Performance - 3Q gaming revenue is expected to grow 13.4% YoY, with domestic and international gaming revenues increasing by 12.4% and 16.0%, respectively [5] - The "DnF" mobile game contributed RMB 8-9 billion in 3Q, while "Peacekeeper Elite" saw iOS revenue growth of 22% and 24% YoY in August and September [5] - During the National Day holiday, Tencent's iOS gaming revenue grew 15% YoY, driven by strong performances from "Golden Shovel," "Peacekeeper Elite," and "Naruto" [5][12] Strategic Developments - The integration of WeChat Pay with Taotian is expected to generate RMB 4-8 billion in annualized commission revenue, primarily from lower-tier cities [4][9] - WeChat Shop upgrades and incentive policies are projected to contribute RMB 150-300 billion in GMV over the next two years [4] - Tencent's video account advertising is expected to accelerate in 4Q, driven by the peak season for live-streaming e-commerce [4] Gaming Segment - Tencent's gaming segment remains robust, with "DnF" mobile game maintaining high rankings on the iOS bestseller list since its launch in May [5] - New games like "Delta Action" achieved RMB 15-25 million in first-week revenue, while "Peacekeeper Elite" saw significant revenue growth due to accelerated commercialization [5][12] - Tencent is focusing on optimizing player experience for "DnF," with updates including new professions, pet functions, and PVP balance adjustments [15][16][17] Valuation and Forecasts - The SOTP valuation for Tencent is based on a sum-of-the-parts approach, with gaming, social networks, online advertising, fintech, and enterprise services contributing to the target price of HKD 495.00 [29] - Revenue forecasts for 2024-2026 have been revised upward by 0.1%, 0.8%, and 1.5%, respectively, driven by stronger advertising and payment revenue growth [22] - Adjusted net profit forecasts for 2024-2026 are RMB 216.3 billion, RMB 250.3 billion, and RMB 285.2 billion, reflecting higher-margin business contributions [22]