TENCENT(00700) 国信证券·2024-10-17 11:40Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [2] Core Insights - Tencent's gaming revenue is increasingly driven by international markets, with overseas revenue growing significantly, accounting for 30% of total gaming revenue in 2023 [2][4] - The report emphasizes the importance of operational changes and strategic adjustments in Tencent's gaming subsidiaries, particularly Supercell, to enhance monetization and user engagement [4][5] - The gaming industry is experiencing a shift towards service-oriented models (GaaS), which Tencent is well-positioned to leverage due to its extensive experience in game monetization [19][20] Summary by Sections 01 Overview of Tencent's Overseas Gaming and Market - Tencent's gaming revenue is heavily reliant on overseas markets, with a notable increase in the share of international revenue from 15% in 2019 to 30% in 2023 [2][4] - The company has adopted a strategy of acquiring subsidiaries and collaborating on game development to enhance its presence in international markets [9][11] 02 Supercell and Riot Games Organizational Adjustments - Supercell, a key component of Tencent's overseas gaming strategy, has seen a revenue increase of 70% in the first half of 2024, driven by successful game launches and operational changes [27][28] - Riot Games is focusing on core titles like "League of Legends" and "Valorant," with organizational restructuring aimed at improving player experience and operational efficiency [35][37] 03 Insights on Tencent's Gaming Operations - Tencent is actively restructuring its gaming operations to enhance monetization strategies, including the introduction of new game features and community engagement initiatives [4][5] - The company is also focusing on the importance of high-quality game development and operational management to maintain user interest and revenue growth [4][5] 04 Valuation Insights for Overseas Game Companies - The report discusses the stable valuation of mature overseas gaming companies, highlighting that firms with strong IP and diverse game portfolios maintain stable valuations even during periods of slow revenue growth [4][5] - Tencent's extensive investment in overseas gaming companies has resulted in a rich IP portfolio and significant operational experience, positioning it favorably in the market [4][5] 05 Investment Recommendations - The report recommends maintaining a focus on Tencent's strong competitive position in the global gaming market, particularly as it continues to innovate and adapt its gaming portfolio [5] - Projected revenue growth for Tencent's gaming segment is expected to accelerate in the second half of 2024 and into 2025, driven by successful game launches and operational improvements [5]