Anxin International released a research report that maintains Tencent Holdings's (00700) "buy" rating, with a target price of 490.Rainbowrichesmegawaysslot.6 Hong Kong dollars, benefiting from the smooth commercialization of Wechat with high quality revenue and the continuous upgrading of the AI advertising model, the company's profit margin is expected to remain high. Total revenue of Q1 Tencent increased by 6% in 2024 compared with the same period last year.Rainbowrichesmegawaysslot.3% to 159.5 billion yuan, basically in line with market expectations, gross profit increased 7.1% year-on-year to 52.6%, adjusted net profit rose 54.5% year-on-year to 50.3 billion yuan, exceeding market expectations.

The main points of Anxin International are as follows:

Game performance is deferred, Q2 growth is expected.

2024Q1 Tencent's value-added services business revenue fell 0.9 per cent year-on-year to 78.6 billion yuan, including international game revenue up 3 per cent to 13.6 billion yuan and local game revenue down 2 per cent to 34.5 billion yuan. From the perspective of game pipeline, Q1 Tencent international market game pipeline increased by 34% compared with the same period last year, while the local game market pipeline recovered to 3%. Due to deferred revenue, Q2 game business is expected to resume positive growth. Q1 social network revenue fell 2 per cent to 30.5 billion yuan, mainly due to a decline in revenue from live music and game streaming services, which was partly offset by increased revenue from paying members for music and long videos, live video services and Mini Game services.

The advertising business is the brightest sector.

2024Q1's online advertising business grew 26% year-on-year to 26.5 billion yuan, making it the fastest growing business segment, driven by the growth of Wechat video numbers, Mini Program, official accounts and Sosou, increased user participation and AI-driven advertising technology platforms. Advertising spending increased in all major industries except the automotive industry, with significant increases in games, Internet services and consumer goods.

Financial technology and its business services are growing steadily.

2024Q1 Tencent's revenue from financial technology and corporate services increased 7% year-on-year to 52.3 billion yuan, of which the strong growth in revenue from wealth management services was partly offset by a slowdown in offline consumer expenditure and a reduction in reflected income. at the same time, the growth of cloud service revenue and video merchants' technology service fees have driven enterprise services to achieve more than ten points of year-on-year growth.

The video number is growing rapidly, and the ecological commercialization of Wechat is accelerating.

The market for total users of 2024Q1 video numbers has increased by more than 80% year on year. Wechat has strengthened its efforts by expanding product categories and encouraging more content creators to participate in live streaming.RainbowrichesmegawaysslotVideo number live broadcast with goods ecology.RainbowrichesmegawaysslotThe total length of use of Mini Program has increased by more than 20% compared with the same period last year. Among them, the average daily use of non-gaming Mini Program increased by double digits compared with the same period last year, and Mini Game pipelining increased by 30% compared with the same period last year.

Risk tips: game business does not meet expectations; investment in new business development affects performance; negative risks in Internet regulatory policies, etc.