TENCENT(00700) 信达证券·2024-06-21 08:31Investment Rating - The investment rating for Tencent Holdings (0700.HK) is "Buy" [2]. Core Insights - Tencent reported a revenue of 159.5 billion yuan for Q1 2024, representing a year-over-year increase of 6%. Gross profit reached 83.9 billion yuan, up 23% year-over-year, with a gross margin of 52.6%. Net profit attributable to shareholders was 41.9 billion yuan, reflecting a 62% year-over-year increase [2][4]. Summary by Sections Business Performance - Value-added services generated revenue of 78.6 billion yuan, down 1% year-over-year. Social network revenue decreased by 2% to 30.5 billion yuan, primarily due to declines in music and long video subscriptions, although revenue from video live streaming and mini-games increased. Domestic game revenue fell by 2% to 34.5 billion yuan, impacted by declines in "Honor of Kings" and "Peacekeeper Elite," but offset by strong growth from new games. International game revenue grew by 3% to 13.6 billion yuan, with a 34% increase in gross revenue [2][4][5]. Advertising and E-commerce - Online advertising revenue increased by 26% year-over-year to 26.5 billion yuan, driven by enhanced user engagement and AI-driven advertising infrastructure. Video account advertising revenue more than doubled, benefiting from increased video views and click-through rates. E-commerce revenue from video accounts is expected to grow significantly, with the GMV projected to reach around 100 billion yuan in 2023 [4][9][10]. Financial Technology and Enterprise Services - Financial technology and enterprise services generated revenue of 52.3 billion yuan, up 7% year-over-year. The growth in wealth management services was strong, while payment services faced slow growth due to reduced offline spending. Enterprise services saw a significant increase in gross margin, driven by higher profit margin revenue sources and improved operational efficiency [10]. Future Outlook - The report anticipates that the gaming business will stabilize and see revenue growth rebound with the launch of new games. The advertising and financial technology sectors are expected to maintain healthy growth, with overall gross margins reaching new highs. The company plans to continue enhancing shareholder returns through stock buybacks and dividends, which are expected to support the stock price [11][12]. Financial Projections - Revenue projections for FY2024-2026 are 666.6 billion yuan, 724.7 billion yuan, and 779.0 billion yuan, respectively, with year-over-year growth rates of 9.5%, 8.7%, and 7.5%. Non-IFRS net profit is projected to be 208.0 billion yuan, 244.3 billion yuan, and 269.7 billion yuan, reflecting growth rates of 31.9%, 17.5%, and 10.4% [12].