TENCENT(00700) 华创证券·2024-06-01 01:01Investment Rating - The report maintains a "Buy" rating for Tencent Holdings, with a target price of HKD 464.88 based on a 20x PE for the 2024 NON-IFRS net profit [24]. Core Insights - The report highlights that Supercell's performance, particularly with "Brawl Stars," has been underestimated, and it is expected to drive a sequential acceleration in game revenue [10][24]. - The anticipated launch of "Squad Busters" is expected to perform well based on its initial success in test markets [59]. - The report suggests that Tencent's strong user base from games like "Honor of Kings" and "Peacekeeper Elite" has positively influenced Supercell's operational adjustments [48]. Summary by Sections Revenue and Profit Forecast - The report projects total revenue for Tencent to reach CNY 674.1 billion in 2024, with a year-over-year growth of 10.7% [23]. - The expected net profit attributable to the parent company is forecasted to be CNY 160.9 billion in 2024, reflecting a significant recovery from a decline in 2023 [23][24]. Game Performance - "Brawl Stars" entered the global top 10 revenue rankings in April 2024, indicating a strong market position and potential for further growth [10][28]. - The report notes that Supercell's revenue is expected to grow significantly, driven by the performance of "Brawl Stars" and other titles, with international market revenue projected to reach CNY 627 billion by 2026 [74]. Operational Changes - The report emphasizes that Supercell's operational capacity has improved due to team expansion, which has allowed for better management of existing products [35][48]. - The introduction of new gameplay mechanics in "Brawl Stars" has led to a resurgence in user engagement and retention metrics [34][48]. Market Trends - The report discusses the evolution of shooting games and highlights the potential of the "Metro Royale" gameplay to enhance user experience in "Peacekeeper Elite" [63][67]. - It also notes the increasing popularity of mobile gaming and the opportunities for Tencent to leverage its existing user base to drive growth in Supercell's titles [48][67].