Guoxin Securities·2024-05-16 07:07Investment Rating - The report maintains a "Buy" rating for the company [20][43][27] Core Views - The company's revenue is expected to show a gradual improvement in its gaming business throughout the year, with strong progress in the advertising segment, particularly from video accounts. However, growth in financial technology and enterprise services is anticipated to slow due to base effects [20][31] - The company's high-quality business segments are expected to continue driving profit growth, with an upward revision of profit forecasts for 2024-2026, projecting adjusted net profits of 200.2 billion, 225.6 billion, and 250.9 billion CNY respectively, reflecting increases of 8%, 7%, and 8% [20][31] - The report highlights that the company's gross profit margin improved significantly, reaching 53% in Q1 2024, a year-on-year increase of 7 percentage points, driven by high-margin businesses [21][27] Summary by Sections Advertising Business - In Q1 2024, the company's online advertising revenue reached 26.5 billion CNY, a year-on-year increase of 26%, primarily driven by strong demand for video account advertising and upgrades to the advertising technology platform [28][3] - The total duration of video accounts increased by 80%, significantly surpassing that of Moments, indicating robust growth in this segment [6][28] Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services grew by 7% year-on-year to 52.3 billion CNY in Q1 2024, with strong growth in wealth management services, although overall growth was tempered by a slowdown in offline consumer spending and reduced withdrawal income [7][41] Gaming Business - The company's gaming revenue in Q1 2024 was 48.1 billion CNY, a slight decline of 0.5% year-on-year. However, the total revenue from the domestic gaming market decreased by 2% to 34.5 billion CNY, while international gaming revenue grew by 3% to 13.6 billion CNY [9][40] - The report anticipates a recovery in gaming revenue starting in Q2 2024, supported by strategic adjustments and new game launches [40][13] Financial Performance - The company's Non-IFRS net profit for Q1 2024 was 50.3 billion CNY, a year-on-year increase of 54%, with a Non-IFRS net profit margin of 31.5%, up 10 percentage points from the previous year [27][46] - The report projects that by 2025, new high-quality business segments will account for 13% of total revenue but contribute 29% of total profits, indicating a shift towards higher-margin operations [24][27]