TENCENT(00700) 东吴证券·2024-11-19 06:20Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [1] Core Insights - The company reported a significant profit exceeding expectations, with a notable increase in gross margin by 6.85 percentage points in its financial technology segment [1][4] - Revenue growth remains strong, with a year-over-year increase of 12.1% in Q3 2024, reaching 167.2 billion RMB, although slightly below Bloomberg consensus expectations [1][20] - Non-IFRS net profit for the same quarter was 59.813 billion RMB, reflecting a year-over-year growth of 33.2%, surpassing Bloomberg consensus [1][20] Summary by Sections Revenue Growth and Profitability - The company achieved total revenue of 167.2 billion RMB in Q3 2024, a year-over-year increase of 12.1%, slightly below the expected 167.9 billion RMB [1][20] - The non-IFRS net profit was 59.813 billion RMB, up 33.2% year-over-year, exceeding the expected 54.4 billion RMB [1][20] Gaming Performance - Domestic gaming revenue reached 37.3 billion RMB, growing 14.1% year-over-year, while international gaming revenue was 14.5 billion RMB, up 9% year-over-year [2][24] - The growth in international gaming was driven by strong performances from titles like PUBG MOBILE and VALORANT, which saw a 30% increase in revenue [2][24] Advertising Revenue - Advertising revenue was 30 billion RMB, reflecting a year-over-year increase of 17%, driven by strong demand from advertisers on various platforms [3][30] - The gross margin for advertising increased to 52.99%, up 0.71 percentage points year-over-year [3][30] Financial Technology and Enterprise Services - Financial technology and enterprise services revenue was 53.1 billion RMB, a 2% year-over-year increase, although below the expected 54.1 billion RMB [3][34] - The gross margin for this segment improved to 47.79%, up 6.85 percentage points year-over-year, driven by growth in wealth management services [3][34] Operational Data Growth - The combined monthly active users (MAU) for WeChat reached 1.382 billion, a 3% year-over-year increase, while QQ's MAU was 571 million, a 1% increase [3][36] Margin Improvement - Overall gross margin for Q3 2024 was 53.36%, up 3.87 percentage points year-over-year, attributed to growth in high-margin revenue sources [3][40] - The gross margin for value-added services was 57.45%, reflecting growth in both domestic and international gaming revenues [3][40] Expense Trends - Sales expenses increased by 18.9% year-over-year, primarily due to increased marketing efforts for new games [3][42] - Management expenses rose by 10.5% year-over-year, driven by higher R&D and employee costs [3][42] Earnings Forecast and Rating - The adjusted net profit forecast for 2024-2026 was raised to 217.4 billion, 240.6 billion, and 265.3 billion RMB respectively, with corresponding PE ratios of 16, 14, and 13 times [4][47] - The report emphasizes the company's strong business moat and ecosystem, maintaining the "Buy" rating [4][47]