TENCENT(00700) 东方证券·2024-11-19 06:20Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [5] Core Views - Tencent's Q3 2024 revenue reached RMB 167.19 billion, representing a year-over-year increase of 8% and a quarter-over-quarter increase of 4%. The gross margin was 53%, up 4 percentage points year-over-year but down 0.2 percentage points quarter-over-quarter [2][3] - The net profit attributable to shareholders (IFRS) for Q3 2024 was RMB 53.23 billion, a significant year-over-year increase of 47% and a quarter-over-quarter increase of 12%. The non-IFRS net profit was RMB 59.81 billion, up 33% year-over-year and 4% quarter-over-quarter [2][3] - The report anticipates continued growth in gaming revenue, driven by a low base in Q4 2023 and the expected performance of new game versions in early 2025 [2][3] Summary by Sections Revenue Breakdown - Value-added services revenue for Q3 2024 was RMB 82.70 billion, up 9% year-over-year and 5% quarter-over-quarter. International gaming revenue was RMB 14.5 billion, also up 9% year-over-year, while domestic gaming revenue was RMB 37.3 billion, up 14% year-over-year [2] - Social network revenue grew by 4% to RMB 30.9 billion, supported by mobile game virtual item sales and music subscription revenue, although offset by declines in music and game live streaming services [2] Advertising and Financial Services - Online advertising revenue for Q3 2024 was RMB 30.0 billion, a 17% increase year-over-year, driven by strong demand for advertising inventory from video accounts, mini-programs, and WeChat search [2] - Financial technology and enterprise services revenue was RMB 53.09 billion, up 2% year-over-year and 5% quarter-over-quarter, with growth in wealth management services offset by a decline in payment services due to weak consumer spending [2] Profit Forecast and Valuation - The report projects IFRS net profit for 2024-2026 to be RMB 195.13 billion, RMB 224.53 billion, and RMB 249.81 billion respectively, with non-IFRS net profit expected to be RMB 228.64 billion, RMB 261.49 billion, and RMB 291.44 billion [3] - A sum-of-the-parts (SOTP) valuation method is used, resulting in a target price of HKD 528.62, maintaining the "Buy" rating [3]