TENCENT(HK:00700) Soochow Securities·2025-03-25 10:23Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [1] Core Insights - Tencent's revenue and profit exceeded expectations, with Q4 2024 revenue reaching 172.4 billion yuan, a year-on-year increase of 9.71%, surpassing Bloomberg's consensus estimate of 168.7 billion yuan. The Non-IFRS net profit was 55.31 billion yuan, up 29.6% year-on-year, also exceeding the expected 53.3 billion yuan [9][16] - The gaming business showed strong performance, with revenue of 49.3 billion yuan in Q4 2024, a 20.1% year-on-year increase, outperforming the expected 47.2 billion yuan [20] - Advertising revenue grew significantly, reaching 35 billion yuan, an increase of 17.5% year-on-year, and the gross margin improved to 57.70% [25] - Financial technology and enterprise services revenue was 56.1 billion yuan, up 3.2% year-on-year, indicating a gradual improvement in payment services [27] - The report highlights the strong growth potential in Tencent's advertising business, which is expected to align with or exceed Meta's advertising monetization levels [25] Summary by Sections Revenue and Profit Performance - Q4 2024 total revenue was 172.4 billion yuan, with a year-on-year growth of 9.71% [9][16] - Non-IFRS net profit reached 55.31 billion yuan, reflecting a 29.6% increase year-on-year [9][16] Gaming Business - Network gaming revenue was 49.3 billion yuan, a 20.1% year-on-year increase, exceeding expectations [20] - Domestic game revenue was 33.3 billion yuan, up 23.3% year-on-year, while international game revenue was 16 billion yuan, up 15.1% [20] Advertising Business - Advertising revenue reached 35 billion yuan, with a year-on-year growth of 17.5% and a gross margin of 57.70% [25] - The report suggests a long-term growth potential for Tencent's advertising business [25] Financial Technology - Financial technology and enterprise services revenue was 56.1 billion yuan, up 3.2% year-on-year [27] - The payment business is showing signs of improvement, with transaction volumes increasing [27] Operational Data - WeChat's MAU reached 1.385 billion, a 3% year-on-year increase, while QQ's MAU was 524 million, down 5.4% [29] - The number of paid value-added service accounts was 262 million, an 8% year-on-year increase [29] Margin and Cost Analysis - Overall gross margin improved to 52.57%, driven by growth in high-margin revenue sources [31] - Sales expenses decreased by 6.3% year-on-year, while management expenses increased by 15.6% [33] Earnings Forecast and Valuation - The adjusted net profit forecast for 2025-2026 was raised to 244.1 billion yuan and 269.3 billion yuan, respectively [37] - The report anticipates a PE ratio (Non-IFRS) of 18/16/15 for 2025-2027 [37]