Basic conclusion
1. Looking back on the "slump": it is mainly driven by three types of concerns-capital flows, industry level, and fundamentals, and the development of the company has hit back at the concerns one by one. The main concerns about capital flows include: 1) worries about overseas capital outflows in 2008; 2) worries about the adjustment of the credit rating of the United States in 11 years; and 3) worries about interest rate increases in the US dollar in 15 years. Industry policy concerns mainly include: 1) 14 years of concern about third-party payments; 2) 18 years of concern about online game version numbers. Fundamental concerns mainly include: 1) worries about online games in 2008 and 10 years, and worries about the growth of social users in 11 and 18 years. We believe that the concern of the market was that Tencent's ability to acquire and operate popular games, as well as the growth space brought by Wechat traffic dividends, was underestimated at that time. Tencent's subsequent development also turned into advertising revenue and mobile game revenue through the rapid outbreak of dividends in popular styles across the hot line, DNF, LOL, and Wechat, fighting back against past concerns.
two。 Compared with the market concerns that have fallen sharply in the past, the impact of this market concern on the company is relatively limited. The main concerns of the market are as follows: 1) at the level of capital flows, the US dollar is expected to raise interest rates, and the market is worried about the decline in the attractiveness of Hong Kong stock assets, but the interest rate increase is expected to take place in 2023, which has a relatively limited impact on overseas capital outflows in 2008. 2) at the industry level, the market is worried about the impact of underage civil air defense addiction protection and version number approval policy on the company's game business, but according to the company's disclosure that the proportion of minors running water is relatively low, the company's online game "LOL Mobile Games" has won the version number, so compared with the 18-year "version winter" under the core game did not get the version number, the impact on the company is relatively limited. 3) fundamentals, worried about the slowdown in the growth of mobile games, we think that we have underestimated the dividends of overseas game users. We expect the size of overseas users to be three times that of domestic users, while Tencent, with a number of global IP, is expected to create new overseas popular styles and promote continued growth.
3. Tencent's relative valuation is historically low and has long-term investment value. According to Wind, the company is at historically low levels of PE and PCF Band. We believe that this decline has put Tencent in a depression of value. with the steady development of the company's business, the company still has a good long-term investment value.
Investment suggestion
At present, the market is mainly worried about the growth space of the game business, but we think that the market may underestimate the overseas growth space, and the size of overseas users is expected to be about 3 times that of domestic users. The company's global IP has strong potential to go to sea, and the follow-up development is expected to digest the existing concerns. It is estimated that the company's net profit of 2021 and 2022 NONIFRS in 2023 is 1346, 1657, 2019 billion yuan, respectively, and the EPS is 18.61, 22.26, 26.76 yuan, respectively, and the current share price is 20.12X/16.82X/13.99X, respectively, maintaining a "buy" rating.
Risk hint
Head game performance is not as expected; industry policy and regulatory risks; game launch is not as expected; advertisers' demand is not as expected.