GF Securities maintains a "buy" rating on Tencent (00700) with a fair value of 485.21 Hong Kong dollars.

GF SEC released a research report stating that it maintains a "buy" rating for TENCENT (00700), with the company's revenue expected to reach 657.9 billion and 713 billion yuan in 24-25 years, an increase of 8.0%/8.4% respectively. Adjusted net profit attributable to shareholders is expected to be 221.8 billion and 244.4 billion yuan, with an increase of 45.0% and 10.2% respectively. Based on the revenue and performance of 24 years, the reasonable value calculated based on SOTP is 485.21 Hong Kong dollars per share. The company's advertising performance is stable, with a large commercial space for WeChat, and future plans to expand into WeChat e-commerce may help to continuously increase advertising revenue. The overseas game growth trend is good, while domestic games continue to solidify their perennial products. GF SEC's main points are as follows: Company's release of 24Q3 performance: Revenue reached 167.2 billion yuan in 24Q3, with a YoY/QoQ increase of +8%/+4%, compared to the consensus expectation of 167.9 billion yuan. Non-GAAP net profit attributable to shareholders in 24Q3 was 59.8 billion yuan, with a YoY/QoQ increase of +33%/+4%, compared to the consensus expectation of 54.4 billion yuan. 24Q3 game and advertising performance is stable, while financial business is affected by weak consumption, and mini programs continue to expand transaction scenarios. (1) Game revenue in 24Q3 reached 51.8 billion yuan, with a YoY/QoQ increase of +13%/+7%. Domestic games increased by 14%, driven by games such as "Contract Fearless," "Honor of Kings," "Peace Elite," and "Dungeon & Warriors: Origin." Overseas game revenue increased by 9%, with strong performance from "PUBG Mobile" and "Wild Fight." (2) 24Q3 social networking revenue was 30.9 billion yuan, with a YoY/QoQ increase of +4%/+2%. (3) 24Q3 online advertising revenue was 30 billion yuan, with a YoY/QoQ increase of +17%/+0%. Advertisers' demand for video accounts, mini programs, and search slightly increased, with a slight contribution from Olympic-related brands, and gaming and e-commerce industry advertising spending increased year-on-year, offsetting the weakness in real estate and food and beverage industries. (4) Financial and enterprise service revenue was 53.1 billion yuan, with a YoY increase of 2% and a QoQ increase of 5%. Financial service revenue remained the same year-on-year, while enterprise service revenue saw growth driven by merchant technology service fees. Mini programs' GMV in 24Q3 exceeded 2 trillion yuan, with a double-digit increase, benefiting from coverage in diverse consumer scenarios. Risk warning: Tightening regulations, stricter game approval processes, and risks from competition with short videos.