TENCENT(HK:00700) Huajing Securities·2024-10-15 23:37Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HK$520.00, up from the previous target of HK$480.00 [1][12]. Core Insights - The report highlights improved visibility in gaming growth driven by titles such as "Dungeon & Fighter Mobile" and "Evergreen Games," alongside stable external operating environments for other business segments [1]. - The forecast for Tencent's online gaming revenue growth is set at 13% and 9% year-on-year for Q3 and Q4 of 2024, respectively, with an overall revenue growth expected to accelerate to 12% year-on-year [1][9]. - The report anticipates a 9.5% year-on-year increase in domestic mobile game revenue for 2024, reaching RMB 131.85 billion [7]. Summary by Sections Investment Rating - Rating: Buy - Target Price: HK$520.00, reflecting a 20% upside from the current price of HK$434.20 [1]. Financial Projections - 2024E Revenue: RMB 658.95 billion, with a 0% change from previous estimates [9]. - 2024E EPS: RMB 22.57, down 2% from prior estimates [9]. - 2025E EPS: RMB 24.70, up 4% from prior estimates [9]. Gaming Segment - Domestic mobile game revenue is projected to grow to RMB 131.85 billion in 2024, with a year-on-year growth of 9.5% [7]. - The report expects "Dungeon & Fighter Mobile" and "Evergreen Games" to contribute significantly to revenue growth [1]. Advertising and Financial Services - Q3 2024 advertising revenue is forecasted to grow by 15% year-on-year, with social advertising expected to increase by 16% [1]. - Financial technology and enterprise services are projected to see revenue growth of 1.5% and 11% year-on-year, respectively [1]. Valuation - The SOTP valuation breakdown includes: - Online gaming segment valued at HK$1.6 trillion based on 18x 2025 P/E [12]. - Social value-added services estimated at HK$253 billion based on 15x 2025 P/E [12]. - Financial technology segment valued at HK$991 billion based on 5x 2025 P/S [12].