TENCENT(00700) 国信证券·2024-04-01 16:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price range of 413-435 HKD [55][57] Core Views - The report highlights the rapid development of live-streaming e-commerce as a key driver for the growth of in-platform advertising revenue for platforms like Douyin and Kuaishou [2] - The report emphasizes the importance of platform integration and ecosystem construction for enhancing monetization efficiency, particularly through in-platform advertising and e-commerce [54] - The report suggests that the video platform is currently in a critical phase of commercialization, with significant potential for growth in advertising and e-commerce revenue [55][57] Platform Development and Ecosystem Integration - Douyin established its e-commerce department in June 2020 and cut off third-party product links in October 2020, focusing on building a closed-loop e-commerce system [2] - Kuaishou launched its e-commerce advertising platform, "Magnetic Taurus," in November 2021, and by Q3 2023, in-platform advertising accounted for nearly 50% of its total advertising revenue [2] - Both platforms have shifted towards in-platform advertising as a primary growth driver, with Kuaishou forming a Commercial Ecosystem Committee in September 2022 to integrate e-commerce, commercialization, and live-streaming businesses [2] Live-streaming E-commerce Market Growth - The live-streaming e-commerce market in China grew from less than 500 billion RMB in 2019 to nearly 5 trillion RMB in 2023, with a compound annual growth rate (CAGR) of 35% [12] - The penetration rate of live-streaming e-commerce users among online shoppers increased from 37.3% in March 2020 to nearly 60% by June 2023 [12] Platform Strategies and Key Milestones - Douyin and Kuaishou have both focused on building trust and interest-based e-commerce ecosystems, with Douyin upgrading to "Omni-Interest E-commerce" in 2022 and Kuaishou emphasizing "Trust E-commerce" [20][25] - Both platforms have invested heavily in supply chain infrastructure, with Douyin cutting off third-party links earlier and investing in logistics, while Kuaishou faced challenges with SKU shortages after cutting off third-party links in 2022 [22] Advertising and Monetization - The report notes that the video platform's advertising products are relatively complete but lack specialized tools for e-commerce merchants, similar to Douyin's "Ocean Engine" and Kuaishou's "Magnetic Taurus" [28] - The video platform's advertising revenue is expected to grow significantly, with projections of 253 billion RMB in 2024 and 373 billion RMB in 2025, driven by increased ad load and improved monetization efficiency [55] User Demographics and Content Strategy - The video platform's user base is older compared to Douyin and Kuaishou, with 60% of users aged 36 and above, and a higher proportion of users in first-tier and fifth-tier cities [68] - The platform's content is more focused on lifestyle and knowledge-based topics, with less emphasis on entertainment compared to Douyin and Kuaishou [76] E-commerce Development and Challenges - The video platform's e-commerce business is still in its early stages, with brand GMV accounting for only 15% of total GMV, compared to 30% for Kuaishou [154] - The platform faces challenges in building a robust e-commerce ecosystem, including the need for better supply chain infrastructure and more precise advertising targeting [160] Future Outlook - The report projects that the video platform's e-commerce GMV will reach 3,026 billion RMB in 2024 and 5,130 billion RMB in 2025, driven by increased user penetration and higher transaction frequency [55] - The platform is expected to continue investing in infrastructure and ecosystem development, with a focus on attracting more brand merchants and improving user experience [65]