Guotai Junan Securities·2024-05-27 05:02Investment Rating - The report assigns a rating of "Accumulate" for Tencent Holdings [10]. Core Views - The report highlights that Tencent's Q1 performance exceeded expectations, driven by strong growth in video account advertising and a recovery in gaming, indicating a potential for high growth in the full year [24]. - The company achieved a revenue of 159.5 billion RMB in Q1 2024, representing a year-on-year increase of 6%, which aligns with expectations [39]. - The adjusted net profit for Q1 reached 50.3 billion RMB, a significant year-on-year increase of 54%, primarily due to improved revenue structure and operational efficiency [39]. Financial Data - Overall Performance: Revenue showed steady growth, with a gross profit margin increase leading to accelerated profit growth [49]. - Segment Performance: - Value-Added Services: Revenue was 78.6 billion RMB, down 1% year-on-year, with domestic gaming revenue at 34.5 billion RMB, down 2% [39]. - Advertising: Revenue reached 26.5 billion RMB, up 26% year-on-year, exceeding market expectations [39]. - Financial Technology and Enterprise Services: Revenue grew by 7% year-on-year to 52.3 billion RMB [39]. Operational Data - The WeChat ecosystem remains robust, with a 12% year-on-year increase in paid user accounts for value-added services [31]. - The number of Tencent Video subscribers increased by 3% year-on-year, indicating a recovery in user engagement [39]. Future Outlook - The report anticipates continued high-quality growth for the company, with expectations for non-IFRS adjusted net profits of 196.2 billion RMB and 221.9 billion RMB for 2024 and 2025, respectively [39]. - The target price is set at 449 HKD, suggesting a potential upside of 21% from the current price [39].