Tianfeng Securities·2024-10-31 08:18Investment Rating - The investment rating for Tencent Holdings (00700) is "Buy" with a 6-month target price maintained [1]. Core Views - The report anticipates a resilient growth in earnings, projecting a revenue increase of 8% year-on-year and a Non-IFRS operating profit growth of 17% for Q3 2024 [1]. - The overall gross profit is expected to rise by 16% year-on-year, with a gross margin of 53.3%, reflecting a 3.9 percentage point increase [1]. - Non-IFRS net profit attributable to shareholders is projected to reach approximately 57.4 billion yuan, representing a year-on-year growth of 28% [1]. Summary by Sections Overall Performance - Revenue is expected to grow by 8% year-on-year and 4% quarter-on-quarter in Q3 2024 [1]. - Game revenue is projected to continue its acceleration, while advertising revenue growth may slightly decline but remain resilient [1]. - The company is expected to maintain prudent expense control, with core operating profit growth outpacing gross profit growth [1]. Gaming Segment - Network game revenue is anticipated to grow by 13% year-on-year, with domestic market revenue increasing by 12% and overseas market revenue by 15% [1]. - The report highlights several upcoming game releases that may contribute to revenue growth in Q4 2024 [1]. Advertising Segment - Advertising revenue is projected to increase by 15% year-on-year, driven by healthy growth in video account traffic and orderly expansion of advertising inventory [1]. - The gross margin for the advertising business is expected to rise to 55.9% [1]. Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services is expected to grow by 2% year-on-year, with a continued upward trend in gross margin [1]. - The report notes that the growth rate has slowed due to weak macroeconomic conditions [1]. Investment Recommendations - The report maintains forecasts for Non-IFRS net profit for 2024, 2025, and 2026 at 217.8 billion, 251.7 billion, and 278.6 billion yuan respectively [1]. - The current stock price corresponds to a PE ratio of 17x, 14x, and 13x for the years 2024, 2025, and 2026, indicating a relatively low valuation compared to historical averages [1].