According to a research report released by Great Wall Securities, it is firmly optimistic about the long-term value of Tencent Holdings (00700) and maintains a “buy” rating. It is expected that in 2023-2025, the company will achieve revenue of 6073/6738/742.4 billion yuan; net profit of 1475/1636/192.9 billion yuan; and EPS 15.4/17.1 /20.1 yuan. The company “Yuanmeng Star” was officially launched on all platforms on December 15, and reached the top of the iOS game free ranking on the first day of launch.
The report's main points are as follows:
Party games are popping up frequently, and the track space is vast:
Party games have the characteristics of strong social attributes, a low threshold, and a wide audience. In recent years, party games have been popular at home and abroad, including games such as “Among Us” and “Candy Man” from overseas, “Egg Party” by NetEase in China, and “Space Kill” by Giants Network. The logic of the party game circuit has been verified. According to Gamma data, the revenue generated by domestic purchases in China's mobile casual movie market in 2023 was 20.087 billion yuan, an increase of 109.7% over the previous year. The bank believes that party games are one of the main driving factors for this category to achieve high growth, and there is plenty of room for monetization on the party game circuit.
Empowered by “Tencent” social networks, suitable for casual games:
The bank believes that Tencent, as a leading player in the social media sector in China, is quite compatible with party games (1) Tencent 23Q3 WeChat has a monthly activity of 1,336 billion, and has the largest social networking platform for acquaintances in the country, so it can speed up the pace of “Yuanmeng Star” users to accumulate pace and achieve rapid construction of a game ecosystem; (2) Tencent has experience in operating a variety of major DAU games, such as “Wang Zhe Rongyao” and “Peace Elite”. The above two games have achieved rapid social transformation through WeChat and QQ, and maintained a successful game market through long-term game management. front row. Overall, the bank believes that “Yuan Dream Star” has stronger social attributes and is expected to rely on the high-quality traffic pool of Tencent's social ecosystem and Tencent's rich experience in running big DAU games to achieve steady growth in DAU and ARPU.
Multiple IPs are linked to create a high-quality gaming ecosystem.
Currently, “Yuan Meng Star” has received official licenses from “Sugar Bean Man” and “Man Defeated”, and has announced links with various private and external IPs such as “Wang Zhe Rongyao,” “Crayon Shin-chan,” and “Kung Fu Panda.” In addition, Tencent announced at the previous “Yuanmeng Star” press conference that it plans to invest 1.4 billion dollars in the first phase of the game ecosystem, of which 100 million will be invested in the construction of a national e-sports competition system, 300 million will be used as incentives for content ecosystem creators, and the 1 billion dream plan will be used as incentives for UGC map creators. The company is expected to build a high-quality “Yuanmeng Star” game ecosystem.
Risk warning: Party game circuit competition intensifies; user data falls short of expectations; post-game turnover falls short of expectations; game industry regulation risks.