Orient Securities released a research report stating that maintaining the “buy” rating of Tencent Holdings (00700), the net profit from IFRS for 23/24/25 is estimated to be 1152/1339/153.3 billion yuan, the net profit from NonIFRS to mother is 1577/1894/215.8 billion, and the target price is HK$375.04. In terms of games, “DNF” is expected to increase in Q2 launch, while commercialization of “Peace Elite” and “Wang Zhe Rongyao” 24Q2-Q4 is expected to increase year-on-year. In terms of advertising, there is room for improvement in video ad load, and demand for internal circulation continues to grow.
According to the report, in 23Q4, Tencent's revenue was 155.2 billion, gross margin was 50.0%, net profit to mother (IFRS) was 27 billion, and net profit to mother (non-IFRS) was 42.7 billion yuan. By business, revenue from value-added services during the period was 69.079 billion yuan (yoy -1.9%, qoq -8.8%). The bank expects the commercialization of “Wang Zhe Rongyao” and “Peace Elite” to increase year-on-year starting in 24Q2, and the launch of “DNF” is expected to drive year-on-year growth. Online advertising revenue is 29.79 billion yuan (yoy +20.8%, qoq+ 15.8%). The bank expects that the supply-side volume of applet content will drive the growth of WeChat advertising demand. Fintech and corporate services revenue of $54.379 billion (yoy+ 15.1%, qoq +4.5%). The increase was mainly due to increased payment activities and increased revenue from financial services.