Tencent (00700) performance will be unveiled on Wednesday, "Star of the Galaxy" flow performance becomes the focus of market attention.

Tencent (00700) will announce its fourth-quarter performance for 2023 on March 20 (this Wednesday). The market expects Tencent's Q4 2023 revenue to be 157.364 billion RMB, a 9% increase year-on-year; adjusted net profit to be 41.469 billion RMB, a 40% increase year-on-year, with an estimated earnings per share of 3.58 RMB. Among them, the game business is expected to grow by 4% in Q4; social networking revenue is expected to increase by 1% in Q4; advertising revenue is expected to grow by 16% in Q4; and financial technology and enterprise services revenue are expected to increase by 15% in Q4. Morgan Stanley predicts that Tencent's Q4 2023 revenue will increase by 8% year-on-year, with online game revenue increasing by 1%. Morgan Stanley mentioned that the market will focus on the performance of the mobile game "Yuanmengzhi Xing" and the multiplayer online battle arena game (MOBA) in December last year to observe the driving force for this year's game revenue acceleration. Since December last year, the game industry has been paying close attention to the battle between Tencent's "Yuanmengzhi Xing" and NetEase's "Egg Party". At Tencent's annual meeting on January 29, Pony Ma criticized the lack of standout products in Tencent's gaming business compared to its competitors. The new products from Tencent's competitors that Pony Ma pointed out mainly include NetEase's mobile game "Nishuihan" and "Egg Party," as well as Mihoyo's "Honkai: Star Rail." According to DataEye, since January, the promotional material investment for "Yuanmengzhi Xing" has been increasing. However, since the normalization of competition with Egg Party, Yuanmeng has not shown signs of surpassing Egg Party. According to third-party data, Egg Party users have a higher acceptance and satisfaction of paid props, with ARPU stable at around 35 RMB, while Yuanmeng's ARPU is approximately between 10-17 RMB. In addition, the income gap between "Yuanmengzhi Xing" and "Egg Party" has become increasingly apparent. Seven Mai data shows that in the estimated IOS revenue performance from February 4 to February 24, "Yuanmengzhi Xing" was $4.6391 million, while "Egg Party" was as high as $20.2079 million. According to NetEase's 2023 financial report, since its launch in 2022, "Egg Party" has accumulated 500 million registered users, and the "Nishuihan" mobile game series has reached a new milestone with over 100 million active users. As the net income from mobile games such as "Egg Party" and "Nishuihan" increases, the net income from mobile games for NetEase in 2023 accounts for approximately 75.2% of the total online game net income, compared to 67.0% in 2022. NetEase's full-year revenue in 2023 surpassed the one trillion mark, reaching 103.5 billion RMB, a 7.25% year-on-year increase; the gaming business revenue reached 81.6 billion RMB, a 9.4% year-on-year increase, further rising to 78.8% of NetEase's total revenue. As long as "Yuanmengzhi Xing" cannot display performance in gameplay, graphics, etc. that surpasses other products, it will be difficult to attract Egg Party players. Some senior game industry insiders even believe that the advantages of "Egg Party" will be further highlighted in 2024, leading to a widening gap in market share and revenue between "Yuanmengzhi Xing". New games from Tencent performed below expectations, but old games continue to show growth resilience. According to DotData, games such as "King of Glory" and "Peace Elite" exceeded 1 billion in revenue during February 9 to February 17. Tencent's financial report shows that thanks to the increase in revenue from "Arknights", "Unyielding Covenant", and "MapleStory: Legend of Maple", as well as perennial games like "King of Glory" and "DNF," Tencent's domestic gaming revenue in Q3 2023 increased by 5% to 32.7 billion RMB year-on-year, although the growth rate is far behind the 14% in the international market. It is worth noting that "Dungeon and Warrior: Origin" started testing on February 29. If it goes online this year, it may accelerate Tencent's revenue growth and increase its valuation. Regarding video channels, the financial report shows that Tencent's Q3 2023 video channel total playback volume increased by more than 50% year-on-year, with advertising revenue of 25.7 billion RMB, reaching a new high, a nearly 20% increase year-on-year. According to multiple media reports, the scale of WeChat's video channel live streaming e-commerce has increased significantly year-on-year in 2023, with GMV growing close to three times that of the previous year, supply increasing by over 300%, and orders increasing by over 244%. The GMV share of live e-commerce for WeChat's video channel is 15%, with a growth rate of 226%. In January this year, Pony Ma stated at the Tencent annual conference that the company will focus on developing video channel live e-commerce in 2024. Leveraging the over one billion daily active users on WeChat, video channel promotions can be targeted to specific individual users, who are the brand's private domain users, thereby significantly improving conversion rates. Tencent is focusing on video channel e-commerce, which is expected to make another impact on the e-commerce industry.