: Maintain a "buy" rating on TENCENT (00700) with a target price of 54.6 Hong Kong dollars.

Huachuang Securities released a research report stating that they maintain a "buy" rating for TENCENT (00700) and expect the company's revenue for 24-26 to be 658.6/717.9/771.3 billion yuan, with a year-on-year growth of +8%/9%/7%; non-IFRS net profit attributable to parent company is expected to be 222.3/251/276.1 billion yuan, with a year-on-year growth of +45%/16%/13%. The company is given a target valuation level of 18xPE for non-IFRS EPS in 2025, corresponding to a target price of 546.6 Hong Kong dollars. On December 17th, WeChat Small Store conducted a gray test of the "gift giving" feature, where products in all categories (except jewelry and education/training) priced at less than 10,000 yuan will default to supporting the "gift giving" feature. Users can enter the product page on WeChat Small Store, click on "send to friend" to open the "confirm gift" page, choose a friend from their WeChat contacts, make the payment, and the gift will be automatically sent out. The recipient will receive a "WeChat gift" message notification in a similar form to a WeChat red envelope. Huachuang Securities' main points are as follows: Analysis of the "gift giving" process: the function is simple and user-friendly for all parties involved. The team's test experience is as follows: Sender: Enter the search scenario of a category shelf e-commerce platform and place an order on WeChat Small Store. Click on "send to friend" below the product name to jump to the "confirm gift" page. In the "gift giving" page, choose a friend from the WeChat contacts (currently only supports sending to one friend). The sender cannot cancel the gift or order within 24 hours and cannot see the recipient's address. For the tested product, the fastest order delivery time was just over an hour from ordering to shipping. Recipient: Similar to the experience of receiving a red envelope, confirm receiving the gift and fill in the address. The sender cannot see the address. After confirming receipt, the recipient can see the gift in the "to be shipped" status on the order page and can perform actions such as "apply for after-sales service," "modify address," and "remind shipment." Business side: The new feature is user-friendly and businesses can decide independently whether to participate. The new feature on the merchant's store page does not involve complicated functional modules, making the entire ordering process simple. According to 36Kr, businesses can decide independently whether to participate in this activity. If a business does not wish to participate, they can disable this function on the "WeChat Store-Marketing Center-Gift Giving" page. The "gift giving" function is an exploration of user habits and an expansion of new social scenarios. This test of the gift-giving function on WeChat Small Store is similar to the red envelope function that caused a sensation when it was launched in 2014 - both were introduced before the Chinese New Year, expected to have a social viral effect, and satisfy a certain "emotional value" for users. Activating social relationships between the sender and recipient may promote orders and conversions during festive periods. At the same time, social endorsements may bring premium prices to products. The "gift giving" feature on WeChat Small Store, due to its social nature and closed-loop ecosystem, may make buyers more tolerant of premium prices for products. Sellers may encounter new sales scenarios, which may lead to new packaging, logistics needs, etc., and accelerate the opening of WeChat Small Stores, promoting the vitality of the WeChat e-commerce ecosystem. The further improvement of the WeChat e-commerce ecosystem shifts from focusing on operations to products and the ecosystem. On May 28, 2024, WeChat underwent a new round of organizational restructuring, merging the WeChat video live e-commerce team into the WeChat open platform team (mini-programs, public accounts, etc.). Combined with the test of the gift-giving function on WeChat Small Store, the company may gradually adjust its approach to e-commerce, shifting from "heavy operations" to placing more emphasis on the "ecosystem platform." By standardizing and productizing WeChat Small Store, the company aims to connect internal private-domain ecosystems. At the same time, companies in the industry chain are expected to benefit from the incremental changes - the current WeChat Small Store ecosystem is still in its early stages, with entry points integrated in search, public accounts, video number advertising, etc., so the demand for advertising placements and brand operations may benefit from the significant increase in merchant participation. Risk warning: macroeconomic fluctuations; product launch progress is less than expected; intensification of industry competition; tightening industry regulation.