Tianfeng Securities·2024-05-27 05:02Investment Rating - The report maintains a "Buy" rating with a target price of 476 HKD, indicating an expected return of over 20% within the next six months [8][9]. Core Insights - The company's gaming business shows a clear recovery trend, with gross margin improvements consistently exceeding market expectations, leading to an upward revision of market profit forecasts [9]. - The company reported a 6% year-on-year revenue increase in Q1 2024, slightly above Bloomberg consensus expectations, with a 30% year-on-year increase in Non-IFRS operating profit [8][9]. - The investment portfolio is gradually being repriced, with potential returns from investments expected to increase as the profitability of joint ventures improves [9]. Summary by Sections Financial Performance - In Q1 2024, the company's advertising revenue increased by 26% year-on-year, with a gross margin of 55%, significantly exceeding Bloomberg consensus expectations [4]. - The Non-IFRS net profit attributable to the parent company reached 73 billion HKD in Q1 2024, a 54% year-on-year increase, surpassing Bloomberg's expectations [8][9]. - The gross margin for Q1 2024 was reported at 52.6%, with a year-on-year increase of 23%, exceeding market expectations [8][9]. Market Outlook - The report suggests that the market's profit expectations still have room for further upward revisions, particularly regarding gross margin forecasts [9]. - The company is expected to benefit from new game launches and improvements in existing game performance, with overseas game revenue projected to grow by 14% year-on-year in 2024 [9]. Strategic Initiatives - The company is actively investing in AI technology development, which is anticipated to be a significant growth multiplier in the medium to long term [9]. - The report highlights the importance of the company's global research and development ecosystem, which supports a continuous pipeline of high-quality products [9].