Jinwu Financial News | According to Tianfeng Securities Research, the bank believes that the market has relatively sufficient expectations for Tencent (00700) 1Q2024 revenue growth to be lackluster. The bank expects game business growth to enter a recovery path starting in 2Q2024, driving a recovery in revenue growth. Combined with changes in revenue structure, the gross profit margin will continue to increase, and the basis for continued profit growth is relatively solid. In the medium to long term, the company actively lays out the development of AI technology. The diversified product matrix corresponds to a broad range of potential application combinations, and technological progress may be an important growth multiplier in the medium to long term.
The bank pointed out that considering better-than-expected growth factors for gaming, the bank raised its 2024-2025 forecast net profit from non-IFRS to 185.2 billion yuan and 212.7 billion yuan (the original forecast was 181.6 billion yuan and 205.2 billion yuan), and introduced a 2026 forecast non-IFRS net profit of 239.1 billion yuan, corresponding to 17%/15%/12% year-on-year growth rates for 2024-2026, respectively.
The bank said that as of 2023/5/10, the company's stock price corresponding to the 2024/2025/2026 forecast PE is 18x/15x/14x, respectively. The 12-month market rolling outlook PE is below the 5-year median 1.1 standard deviation and is in the historical quantile of 16%. Compared to the NASDAQ 12-month market outlook PE, which is 1.4 standard deviations below the 5-year median, is at a 10% historical quantile. The valuation is relatively low. The bank expects 2Q2024 revenue growth to begin to recover, which will help further improve short-term valuation constraints. The target price was maintained at HK$476 and the “Buy” rating was maintained.