TENCENT(00700) 广发证券·2025-01-16 07:04Investment Rating - The investment rating for Tencent Holdings is "Buy" with a current price of HKD 380.00 and a fair value of HKD 478.52 [5][20]. Core Views - The report anticipates a strong performance in gaming, resilient advertising, and a recovery in financial services for Tencent in Q4 2024. The expected revenue for Q4 2024 is RMB 169.1 billion, representing a year-over-year increase of 9% [9][20]. - The gaming revenue is projected to accelerate, with expectations of reaching RMB 46.6 billion in Q4 2024, a 14% year-over-year increase. Domestic gaming is expected to grow by 16% while overseas gaming revenue is projected to increase by 10% [9][20]. - The report maintains a positive outlook on Tencent's core business driven by product innovation and social media traffic, suggesting that the company can gradually release its commercialization potential through innovations like WeChat stores [9][20]. Summary by Sections Earnings Forecast - The report provides a detailed earnings forecast for Tencent from 2022 to 2026, with revenue expected to grow from RMB 5,546 million in 2022 to RMB 7,685 million in 2026, reflecting a compound annual growth rate (CAGR) of approximately 7.8% [4][20]. - Non-GAAP net profit is projected to increase from RMB 1,149 million in 2022 to RMB 2,775 million in 2026, with a significant growth rate of 45.3% in 2024 [4][20]. Financial Metrics - The report highlights key financial metrics, including an expected EPS of RMB 24.10 in 2024, with a P/E ratio of 14.5, and a projected ROE of 22.4% [4][20]. - The EBITDA is forecasted to grow from RMB 1,612 million in 2022 to RMB 3,379 million in 2026, indicating a strong operational performance [4][20]. Valuation - The report employs a Sum-of-the-Parts (SOTP) valuation method, estimating the core business value at HKD 404 billion and the investment business value at HKD 37.23 billion, leading to a total fair value of HKD 478.52 per share [17][20]. - The gaming business is valued at HKD 189.74 per share based on an 18x P/E ratio, while the advertising business is valued at HKD 104.73 per share using a 27x P/E ratio [17][20].