The readings of this report are as follows:
The latest version of Wechat will allow users to access external links in one-on-one chat scenarios. Open outside the chain will introduce new traffic for Douyin and Taobao. WeChat Mini Programs will promote more transactions, WeChat Pay application scene is expected to usher in a breakthrough.
Summary:
Maintain the "overweight" rating and downgrade the net profit in 2022 to 192.2 billion yuan. Open outside the chain will introduce new traffic for Douyin and Taobao, and WeChat Pay's application scene is expected to usher in a breakthrough. Tencent lowered its 2021-2023 net profit from homing to 1,92149.9 billion yuan (the previous value was 1729x2151x267.9 billion), corresponding to 21X/19X/17X (current price), maintaining the "overweight" rating.
Event: Tencent issued a statement on the adjustment of the Wechat external links content Management Standard on Sept. 17, saying that external link management measures will be implemented in stages and steps under the guidance of the regulatory authorities. the latest version of Wechat will allow users to access external links in an one-to-one chat scene.
The open chain will introduce new traffic to competitive products such as Douyin and Taobao, and advertising revenue is expected to return to Wechat.
At present, Ali products such as Hema Fair, Gaode Taxi, Youku Video, as well as Baidu, Inc. products such as Baidu, Inc. Map and iQIYI, Inc. have been connected to WeChat Mini Programs. In the future, major external applications such as Douyin and Taobao may enter the ecology of Wechat through third-party links and Mini Program. Taobao's ranking mechanism and brand structure determine that the cost of in-Amoy promotion tools such as through train and diamond booth is high; under Douyin's recommendation mechanism of tilting the flow of high-quality content and popular style items, it is difficult for merchants to obtain stable flow and facilitate repurchase. Compared with Taobao and Douyin, Wechat is the only platform with low cost and high frequency to reach consumers, build trust relationships and precipitate core users. Interconnection means that merchants can more smoothly channel users from various platforms to Wechat for private domain operations. Therefore, we believe that although Douyin, Taobao and other competitions will carve up new traffic from Wechat, Wechat is still the best platform to complete the final precipitation of traffic, and external diversion will not weaken Wechat's social flow moat.
WeChat Mini Programs will promote more transactions, WeChat Pay application scene is expected to usher in a breakthrough. According to the 2021 Wechat Open course PRO data, WeChat Mini Programs's cumulative transaction volume increased by more than 100% in 2020 compared with the same period last year, and the per capita transaction volume increased by 67% over the same period last year. If Taobao, Tmall, Taote and other APP access WeChat Mini Programs, it will significantly enhance the richness of Mini Program and enhance Wechat's ecological e-commerce capacity. If the above APP master site further supports WeChat Pay, WeChat Pay is expected to enter the mobile shopping scene based on a human and offline consumer trading scene, and the competitive pattern of third-party payment may be reshaped. BABA's APP access WeChat Pay takes the lead in breaking down barriers, and WeChat Pay's application scene is expected to usher in a breakthrough.
Risk tips: new games, video numbers are not as expected, policy regulatory risk, user loss risk.