TENCENT(00700) 光大证券·2024-04-21 03:32Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (0700 HK) with a target price of 430 HKD [68][117] Core Views - Tencent's shareholder return ratio has significantly increased from 11%-14% in 2016-2021 to 44%-47% in 2022-2023, driven by increased share buybacks and dividend payouts [3] - Tencent's 23Q4 Non-IFRS net profit reached 42 7 billion yuan, up 44% YoY, exceeding Bloomberg consensus estimates of 419 7 billion yuan [9] - Video account advertising and live e-commerce are expected to accelerate commercialization in 2024, with video account live streaming GMV growing 3x YoY in 2023 [117] Financial Performance - Tencent's 23Q4 revenue rose 15% YoY to 544 billion yuan in the fintech and business services segment, driven by commercial payment recovery and cloud service growth [66] - The company's 23Q4 advertising revenue grew 21% YoY to 298 billion yuan, outperforming the industry average, mainly due to strong demand for video account ads [83] - Tencent's 23Q4 gaming revenue in the domestic market declined 3% YoY to 270 billion yuan, impacted by seasonal weakness in flagship titles like Honor of Kings and Peacekeeper Elite [23] Shareholder Returns - Tencent's share buyback amount in 24Q1 reached 14 8 billion HKD, up 220% YoY, with plans to increase total buybacks to over 100 billion HKD in 2024 [147] - The company's shareholder return ratio (buybacks + dividends) as a percentage of Non-IFRS net profit increased from 11%-14% in 2016-2021 to 44%-47% in 2022-2023 [3] Video Account Ecosystem - Video account live streaming GMV grew 3x YoY in 2023, with apparel and jewelry categories contributing 38% and 15 8 billion yuan respectively to total GMV [18] - Tencent launched new monetization features for video account creators, including a revenue sharing program for accounts with 100+ followers and daily payout options [17] - The platform introduced lower service fees (1%) and shipping insurance subsidies during the 2023 Double 11 shopping festival to attract more merchants [20] Gaming Business - Tencent's domestic gaming revenue declined 3% YoY in 23Q4, mainly due to seasonal weakness in Honor of Kings and Peacekeeper Elite [23] - The company has a strong pipeline of new games, including DNF Mobile, Delta Force Hawk Ops, and Assassin's Creed Jade, expected to launch in 2024 [32][41] - Tencent's overseas gaming revenue remained stable in 23Q4, with PUBG Mobile generating 3 3 billion yuan in revenue, up 6% YoY [38] Cloud and Fintech - Tencent Cloud achieved 27% YoY revenue growth in 23Q4, with a 16% market share in China's cloud infrastructure services market [67] - The company's fintech services grew 15% YoY in 23Q4, driven by recovery in offline commercial payments and growth in wealth management and consumer lending services [66] Content Ecosystem - Tencent Video's paid subscribers reached 117 million in 23Q4, with exclusive dramas like Blossoms Shanghai and Heart's Question topping viewership charts [48] - Tencent Music Entertainment's online music paying users grew 20 6% YoY to 106 million in 23Q4, with ARPPU reaching a record high of 10 7 yuan [81]