According to a research report issued by China Galaxy Securities, the "recommended" rating of Tencent (00700) is maintained, and the performance is expected to gradually return to growth as the economy recovers. The net profit of Non-IFRS in 2023-25 is expected to be 1465.28 RMB 1706.25 / 194.774 billion yuan. In the first half of 2023, the company realized revenue of 299.194 billion yuan, compared with the same period last year, the net profit of returning home was 70.086 billion yuan, + 30.55%, and the gross profit margin was 46.47%, an increase of 3.82pct over the same period last year.
The main points of the report are as follows:
New local games will be launched in July, and Q3 local games are expected to improve.
23Q2 domestic game revenue 31.8 billion yuan, year-on-year + 0%, month-on-month-9%; international game revenue 12.7 billion yuan, year-on-year + 19%, month-on-month-4%. In terms of overseas games, the decline in month-on-month income is mainly due to the decline in the income of "Goddess of Victory: Nikki". In terms of local games, the company's game revenue declined seasonally after the peak of game flow during the 23Q1 Spring Festival. At present, the new games "intrepid contract" ("VALORANT" national service version) and "Destiny Ark" two large PC games were launched in July, and it is expected that Q3 local games will return to year-on-year growth with the subsequent improvement of commercial content.
Advertising business continues to grow, optimistic about the growth potential of video number.
23Q2 online advertising revenue of 25 billion yuan, year-on-year + 34%, month-on-month + 19%, mainly due to the increase of advertising platform customer traffic, advertising platform machine learning system upgrade and "618" shopping festival, of which video advertising revenue has exceeded 3 billion yuan. During the reporting period, the total number of users of the video account almost doubled compared with the same period last year, and Mini Program had more than 1.1 billion monthly active users. The increase in user traffic of these two major carriers significantly increased their attractiveness to advertisers. With the exception of the automobile transportation industry, advertising spending on platforms in all key advertisers increased by more than 10% year-on-year.
Consumption recovers significantly compared with the same period last year, boosting financial technology business
The income of 23Q2's financial technology and enterprise services business was 48.6 billion yuan, which was basically the same as the previous month, with an increase of 15% over the same period last year. The increase in fintech revenue has mainly benefited from a year-on-year recovery in payment activity and a rebound in online payment transactions. The increase in corporate service revenue mainly benefited from the increase in the number of live video number transactions with goods.
Risk tips: Internet industry regulatory risks, the risk of intensified market competition, macroeconomic risks, AI technology research and development is not as expected risk.