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腾讯控股(00700):Q1广告超预期增长 期待常青游戏变化及国内外重磅游戏上线

Tencent Holdings (00700): Q1 advertising surpassed expectations, looking forward to changes in Evergreen Gaming and the launch of major games at home and abroad

東方證券 ·  May 17

24Q1's revenue was $159.5 billion (yoy +6.3%, qoq +2.8%). The gross margin was 52.58%, (yoy+7.1pp, qoq+2.6pp). Net profit to mother (IFRS) for 24Q1 was $41.9 billion (yoy +62.1%, qoq +55%); net profit (non-IFRS) was $50.3 billion (yoy +54.5%, qoq +17.8%).

24Q1 value-added service revenue of 78.6 billion (yoy -0.9%, qoq +13.8%). The game revenue in the international market was 13.6 billion (yoy +2.7%, qoq -2.2%), thanks to a resurgence in the popularity of Supercell games (in particular, “Brawl in the Wild”) and the increase in users and traffic of “PUBG MOBILE”. The domestic market's game revenue of 34.5 billion (yoy -1.7%, qoq +27.8%) was due to revenue delays. The year-on-year decline in revenue for “Wang Zhe Rongyao” and “Peace Elite” was offset by the revenue contributions of the recently released games “Fearless Contract” and “Ark of Destiny”, as well as strong growth in “Battle of the Golden Shovel”. Looking at the core cornerstone games: 1) “Wang Zhe Rongyao” was commercialized only in Q1 in '23, and the 23Q2-Q4 base is low; 2) “Peace Elite” management changes and numerical model changes. We expect year-on-year growth in Q2-Q4. Looking at new games: Domestic “DNF” and others are expected to launch in Q2, and overseas “Squad Busters” will be launched in various countries one after another, which is expected to contribute to growth. The social network's revenue was $35.0 billion (yoy -1.5%, qoq +8.3%), with service fees for paid music and video games, WeChat live streaming, and mini-games growing.

24Q1 online advertising revenue of 26.5 billion (yoy +26.4%, qoq -11%). Among them, video ad revenue increased by more than 100% year over year, applet advertising revenue increased by more than 40% year over year, and long video advertising revenue increased by double digits year on year, thanks to increased user engagement and AI-driven advertising technology platforms.

24Q1 fintech and corporate services revenue was $52.3 billion (yoy+ 7.4%, qoq -3.8%). Offline consumer spending growth slowed and withdrawal revenue declined, while revenue from financial services grew strongly. Revenue from the enterprise service business achieved a year-on-year increase of more than ten points, thanks to the increase in cloud service revenue and technical service fees for video account merchants.

In terms of games, “DNF” is expected to contribute an increase in Q2 launch, while the commercialization of “Peace Elite” and “Wang Zhe Rongyao” 24Q2-Q4 is expected to increase year-on-year. In terms of advertising, there is room for improvement in video ad load, and demand for internal circulation continues to grow. Net profit attributable to IFRS is estimated to be RMB 1657/1884/218 billion in 24-26 (the original value was RMB 133.9/153.3 billion in 24/25, as Q1 value-added services, advertising and investment revenue was better than the expected increase in profit forecasts), and the net profit attributable to non-IFRS for 24-26 was RMB 2110/2418/276.1 billion yuan. Using SOTP valuation, a corresponding target price of HK$415.62 (378.46 RMB HKD/RMB=0.91) was given, maintaining the “buy” rating.

Risk warning

Policy risk, risk of game revenue falling short of expectations, competition risk in the advertising industry

The translation is provided by third-party software.


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