2024-03-24 16:00Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [4][7] Core Insights - Tencent's Q4 2023 revenue reached 155.2 billion RMB, a year-on-year increase of 7%, slightly below Bloomberg consensus expectations by 1.4%. Adjusted net profit attributable to shareholders was 42.7 billion RMB, a 44% year-on-year increase, exceeding consensus expectations by 1.7% [1] - The company plans to enhance shareholder returns, with a proposed dividend of 3.40 HKD per share (approximately 32 billion HKD), representing a 42% increase. The share buyback plan for 2024 is set to at least double from 49 billion HKD in 2023 to over 100 billion HKD in 2024 [1] - The report highlights strong growth in advertising, fintech, and enterprise services, with video accounts playing a significant role in driving revenue [1] Revenue and Profit Analysis - In Q4, domestic game revenue declined by 3% year-on-year, while overseas game revenue grew by 1%, slightly below expectations. Key domestic products faced pressure, but the company anticipates a strong product cycle in 2024 with several major releases planned [2] - Advertising revenue in Q4 grew by 21% year-on-year, driven primarily by video accounts, which saw total usage time double in 2023. The report indicates that there is still room for improvement in loading rates and AI-driven effectiveness [2] - The fintech and enterprise services segment grew by 15% year-on-year in Q4, in line with expectations, with cloud services also showing a 20% increase [3] Financial Forecasts - The report slightly lowers profit forecasts, projecting adjusted net profits of 180.1 billion RMB for 2024 and 209.6 billion RMB for 2025, with a new forecast for 2026 set at 230.1 billion RMB [4] - The target market capitalization is adjusted from 40,527 billion RMB to 38,184 billion RMB, corresponding to a target price of 443 HKD, indicating a potential upside of 54% [4] Financial Data Summary - Revenue for 2023 is reported at 609 billion RMB, with a projected growth rate of 9.8%. The adjusted net profit for 2023 is 157.7 billion RMB, reflecting a 36.4% year-on-year increase [6] - The report provides detailed financial projections for 2024 to 2026, indicating steady growth in revenue and profits across various segments [6][15]