2024-05-23 05:02Investment Rating - The report assigns a "Buy" rating to the company with a target price of 490.6 HKD, representing a potential upside of 24.2% from the recent closing price of 395.0 HKD as of May 20, 2023 [2]. Core Insights - The company's advertising business has shown significant growth, with a 26% year-on-year increase in Q1 2024, reaching 265 billion RMB, driven by the growth of WeChat video accounts, mini-programs, public accounts, and search services [17]. - The overall revenue for Q1 2024 increased by 6.3% year-on-year to 1595 billion RMB, with a notable 54.5% year-on-year growth in adjusted net profit, exceeding market expectations [8]. - The gaming business is expected to stabilize and recover, with international game revenue growing by 3% to 13.6 billion RMB, while domestic game revenue saw a slight decline of 2% to 34.5 billion RMB [1][8]. Financial Performance Summary - In Q1 2024, the gross margin increased by 7.1 percentage points to 52.6%, indicating improved profitability [8]. - The financial technology and enterprise services revenue grew by 7% year-on-year to 52.3 billion RMB, supported by strong growth in wealth management services [9]. - The company's total revenue is projected to reach 661.7 billion RMB in 2024, with a net profit forecast of 167.98 billion RMB, reflecting a robust growth trajectory [14].