Hong Kong stock concept tracking | Tencent released its third quarter report today. Institutions have high hopes for the gaming sector's improved outlook (with concept stocks attached)

Tencent will announce its third-quarter performance on November 13th, with market expectations of revenue of 167.93 billion yuan, an 8.6% year-on-year increase, net profit of 45.33 billion yuan, a 25% year-on-year increase, and adjusted net profit of 54.37 billion yuan, a 21% year-on-year increase. There are two key points in Tencent's performance expectations: first is game revenue, particularly the progress of plans to reduce revenue sharing with Apple or Google platforms, and second is the contributions of joint ventures. The market expects game revenue to reach 51.4 billion yuan, a 12% year-on-year increase, with a significant contribution from the Android platform of the popular mobile game "Dungeon & Fighter: Origin" through its own channels, and the impact of using its own channels rather than Google's store, as well as negotiations on revenue sharing on the Apple platform. Tencent's quarterly revenue growth rate is expected to remain below 10%, but the net profit or adjusted net profit is expected to increase at a higher rate. Besides cost reduction, the increase is also attributed to the share of profits from joint ventures. Tencent stated during the second quarter results that the growth in this part is mainly due to the improved performance of several domestic joint venture companies and several overseas game studio joint venture companies. As for the other two revenue streams, the market expects Tencent's network advertising to grow by 16% to 29.76 billion yuan and financial technology and enterprise services to grow by 3.9% to 54 billion yuan. Guoyuan indicated that in the third quarter of 2024, the Chinese gaming market size was 91.766 billion yuan, a month-on-month increase of +22.96%, and a year-on-year increase of +8.95%. In October, 113 domestic game licenses and 15 imported game licenses were issued. Major new games such as Kingnet Network's "Storm of the Black Dragon" and "Eternal Dragon Clan," Tencent's "Dragonstone War," "Burst Team," "Aion 2: Covenant," "Victory Goddess: Nyx," and Kuaishou's "Three Kingdoms Outlook Shenzhou" have been approved for licenses, ensuring a sufficient supply of licenses. In terms of new product launches, Tencent's "Pokmon Unite" will go online on November 7th, G-bits Network Technology's "Echo of the Vision" will be released on November 13th, and Kuaishou's "Endless Dreams" will go online on November 21st. The introduction of quality new games is expected to boost industry confidence and drive continued growth in the gaming market size. Related Hong Kong stocks in the gaming sector include: TENCENT (00700): Tencent's game revenue accounts for 30%, with an increasing proportion from overseas. International game revenue is part of Tencent's value-added services sector, with a share of 49% in total revenue in 2023, including 21% from domestic games and 9% from international games. Tencent's overseas game revenue in 2023 was 53.1 billion yuan, accounting for 30% of game revenue. With the overseas expansion, Tencent's overseas game revenue proportion has gradually increased, from 15% in 2019 to 30% in 2023. Keep an eye on the launch and performance of games such as "Delta Operation," "Locke Kingdom Mobile Game," "King Glory World," and "Unfeared Contract Mobile Game." NTES-S (09999): "Yanyun Sixteen Sounds," "FragPunk," "Code: Infinite." XD INC (02400): "Let's Go Muffin," "Sweet Town" have excellent performance, with future focus on expansion progress outside mainland China. The "Isa Yise" "Original Quality Test" opened from October 24th to November 4th. BILIBILI-W (09626): "Three Kingdoms: A Strategy to Rule the World" is in long-term operation, continuing to explore the gaming business. KINGSOFT (03888): (Xishanju) "Resolution Machine" is attempting to enter the field of mecha combat PC games. BAIOO (02100): Strengthening core IP competitive advantages, continuing to explore AI technology-enabled product development, accelerating international market layout.