Kingwu Financial News | HTSC releases Tencent (00700) Q3 performance outlook, expecting a 9.3% year-on-year increase in Tencent's Q3 revenue. In the short term, Q3 advertising growth rate has slowed down to 16% due to macroeconomic factors, with a slight decline in the revenue of DnF mobile game in September. Due to the impact of slower macroeconomic and social zero growth, the bank expects Q3 advertising and Kimco Realty Corp revenue to grow by 16.4% and 4.0% respectively year-on-year. Expected Q3 game revenue to increase by 13.4%, with domestic and overseas growth rates of +12.4/16.0% yoy respectively.

The bank suggests that compared to short-term fluctuations, focus should be on long-term drivers. Catalysts not yet reflected in the current stock price include: ① "King of Glory: World" and "Dawn" will be launched in 25 years, with an expected monthly average revenue of 1.5-2.5 billion; ② 4Q video ads are expected to increase, with Taotian gradually integrating WeChat Pay in September, expecting a 25-26 year CAGR increase in advertising and payment income of 3-4 percentage points.

Looking ahead to 2024-2026, the bank has raised Tencent's 2024-2026 non-GAAP net income forecast by 0.9/1.1/0.5% to 216.3 billion, 250.3 billion, 285.2 billion yuan. Based on the SOTP valuation, the bank has set a target price of HK$495 for Tencent (previously HK$465.35). Maintaining a “buy” rating.