TENCENT(00700) 光大证券·2024-11-20 06:42Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HKD 430 [1]. Core Insights - Tencent's Q3 2024 performance exceeded expectations, with a Non-IFRS net profit of CNY 598.13 billion, a year-on-year increase of 33%, surpassing the Bloomberg consensus estimate of CNY 543.69 billion [1]. - The company's revenue for Q3 2024 was CNY 1,672 billion, reflecting an 8% year-on-year growth, slightly below expectations [1]. - The report highlights the resilience of Tencent's advertising business and the strong performance of its gaming segment, particularly in the domestic market [1]. Financial Performance - Non-IFRS net profit for Q3 2024 was CNY 598.13 billion, with a Non-IFRS net profit margin of 35.8%, up 6.7 percentage points year-on-year [36]. - The company's tax expenses were CNY 89 billion, significantly lower than the expected CNY 124.2 billion, contributing to the net profit growth [36]. - Tencent's revenue from value-added services reached CNY 827 billion, a 9.17% increase year-on-year, driven by strong performance in domestic gaming [45]. WeChat Ecosystem - The WeChat ecosystem continues to grow, with a combined monthly active user count of 1.38 billion, a 3% year-on-year increase [58]. - WeChat's mini-programs achieved a transaction volume exceeding CNY 2 trillion, reflecting over a 10% year-on-year growth [59]. - The introduction of WeChat Shops is expected to enhance sales conversion rates and provide a standardized trading environment for merchants [63]. Gaming Segment - Domestic gaming revenue for Q3 2024 was CNY 373 billion, a 14% year-on-year increase, driven by flagship games like "Honor of Kings" and "Peacekeeper Elite" [66]. - The overseas gaming revenue was CNY 145 billion, a 9% year-on-year increase, although slightly below expectations due to extended revenue deferral periods [75]. - The report anticipates continued growth in the gaming segment, supported by new product launches and the ongoing success of established titles [66]. Social Network and Marketing Services - Social network revenue for Q3 2024 was CNY 309 billion, a 4% year-on-year decline, primarily due to decreased revenue from music and game live streaming services [79]. - Marketing services revenue reached CNY 300 billion, a 17% year-on-year increase, benefiting from the growth of mini-programs and increased advertising spending within the WeChat ecosystem [45][79]. - The report expects the marketing services segment to continue delivering above-industry growth due to the low base effect and the expansion of WeChat's advertising capabilities [79].