Tianfeng: TENCENT (00700) accelerates global expansion with a focus on digital ecosystems.

Tianfeng released a research report stating that TENCENT (00700) company's game business product cycle is driving short-term game revenue growth acceleration, and increased inventory of video advertisements may support mid-term advertising revenue growth resilience. The growth of financial technology and enterprise service business revenue is expected to gradually improve along with the macroeconomic environment. The company's high gross margin incremental business has laid the foundation for continuous improvement in mid-term gross margin. In terms of international business, it is optimistic about Tencent's global expansion in international business and overseas investments; the overseas business not only helps the company's diversified development in the global market, but also provides a way to participate in global digital economy opportunities. Tianfeng's main points are as follows: Tencent's overseas expansion focuses on digital life, digital content, digital technology, and overseas investments. In terms of digital life, the company promotes various services including social interaction, financial services, and daily convenience to users around the world through the WeChat platform, bringing China's unique digital lifestyle mode and integrated application business strategy to the international stage, and building bridges for overseas businesses, organizations, and individuals to communicate with Chinese tourists and overseas Chinese. In terms of content, digital content primarily consisting of web dramas, online games, and web novels has given rise to many high-quality products overseas. As the company continues to intensify its overseas efforts, the proportion of overseas games is gradually increasing, with overseas game revenue in the game revenue ratio increasing from 23% in the fourth quarter of 2019 to 30% in 2023. In terms of digital technology, Tencent provides digital technology services to more international and Chinese companies going global, leveraging its global digital infrastructure and leading technology product capabilities; Tencent Cloud has experienced rapid growth in overseas markets, with revenue scale growing by over 400% in three years. Digital Life: Social and Payment Dual Engines. The digital life business revolves around WeChat and WeChat, with a combined monthly active account of 1.382 billion as of the third quarter of 2024. WeChat's cross-border payment service covers 74 countries and regions, supports settlement in 31 currencies, and has over a thousand overseas partner institutions and over 6 million overseas merchants. As a unique Chinese innovative product, WeChat Mini Programs are accelerating their expansion overseas, helping overseas businesses meet operational needs at low development costs, demonstrating Tencent's strong influence and broad user base in the global social and payment domains. Digital Content: Building Global Cultural Influence through Content Going Global. In the field of digital content, Tencent Video's overseas version WeTV covers over 200 countries and regions, with total overseas app downloads exceeding 200 million, and operating in 10 languages. In the gaming sector, Tencent's overseas gaming revenue in the third quarter of 2024 was 14.5 billion RMB, a year-on-year increase of 9%; games such as PUBG MOBILE and Battle Royale have shown strong performance overseas; VALORANT has expanded from personal computers to PlayStation and Xbox, launching a console version in five key international markets, driving the game's revenue to grow by over 30% in the third quarter of 2024 compared to the previous year. In the field of online literature, CHINA LIT's overseas platform WebNovel International has coverage in over 200 countries and regions worldwide. As of 2024, CHINA LIT has launched over 3,800 translated works of Chinese online literature overseas, authorizing over 1,000 digital and physical book editions. Digital Technology Cloud: Global Expansion of Cloud Services. Since starting overseas operations in 2016, Tencent Cloud has deployed cloud service infrastructure globally, with 58 global availability zones, over 3,200 global acceleration nodes, over 10,000 overseas corporate customers, and over 11,000 global partners. Based on technologies and products such as AI, cloud-native, audio and video, edge acceleration, and databases, the company provides diversified solutions for overseas institutional users and Chinese companies going global. Tencent Cloud's international business has maintained double-digit high-speed growth for three consecutive years, with the three-year revenue scale of Tencent Cloud's big data business growing by over 400% overseas. Across industries, Tencent Cloud has helped many clients in industries such as gaming, social media, e-commerce, manufacturing, and finance to build efficient, secure, and stable big data infrastructure overseas. Diversified Investments, Strategic Layout. The company's overseas investments have played an important role in the development of its core business, cutting-edge technology cooperation, and global digital ecosystem construction. These investments have allowed Tencent to have a more solid layout in frontier technology fields such as quantum technology, artificial intelligence, and healthcare. Risk Warning: Unexpected expansion of overseas business supply, uncertainties in overseas regulations, adverse effects of foreign exchange, etc.