Guohai Securities·2024-10-15 11:39Investment Rating - The report maintains a "Buy" rating for the company as of October 15, 2024 [1]. Core Insights - The company is expected to achieve strong revenue growth driven by its gaming and advertising segments, with significant profit margin improvements anticipated [3][18]. - Revenue forecasts for FY2024-2026 are projected at 656.4 billion, 715.7 billion, and 774 billion RMB respectively, with Non-IFRS net profits expected to be 220.7 billion, 250.3 billion, and 280.9 billion RMB [3][18]. Revenue Forecasts - Gaming Segment: Anticipated revenue for Q3 2024 is 518 billion RMB, reflecting a year-on-year growth of 13%. Key contributors include "DNF Mobile" and strong performances from "Supercell's Brawl Stars" and "Valorant" [7][8]. - Advertising Segment: Expected revenue for Q3 2024 is 298 billion RMB, with a year-on-year increase of 16%. The growth is driven by video ads and strong performance in sectors like e-commerce and short dramas [10][11]. - Financial Technology and Enterprise Services: Projected revenue for Q3 2024 is 536 billion RMB, showing a year-on-year growth of 3%. The segment is supported by healthy growth in wealth management and stable cloud services [16][17]. Profitability Metrics - The company is expected to achieve a gross margin of 53% in Q3 2024, with Non-IFRS operating profit projected at 607 billion RMB, reflecting an 18% year-on-year increase [5][18]. - Non-IFRS net profit margin is expected to reach 34% in Q3 2024, up 5 percentage points year-on-year [5]. Valuation - The target market capitalization for the company is set at 4.0 trillion RMB (4.4 trillion HKD) for 2024, with a target price of 490 HKD per share based on the SOTP valuation method [18][19].