股
票
研 [Table_Title] Jason Zhou 周桓葳 Company Report: Tencent (00700 HK) 究 (852) 2509 5347 EquityResearch 公司报告： 腾讯控股 (00700 HK) [email protected]
26 June 2020 Expected[Table_Summary] Outstanding Growth in Online Games Business
预计较好的在线游戏业务增长
China’s mobile games market maintained its growth momentum in May, Rating:[Table_Rank] Buy although user time spent is expected to have declined from its peak Maintained 公 during the quarantine period. According to CNG, China’s mobile games market scale increased 11.9% mom in May, reaching RMB17.68 billion. We 司 评级： 买入 (维持) believe that the new titles supply will be the growth engine of the mobile 报 games market in 2H20. 6[Table_Price]-18m TP 目标价 : HK$555.00 告 We have revised up 2020-2022 online games revenue by 2.4%, 2.0% and HK$500.00
CompanyReport 3.5%, respectively, due to 1) expected strong performance of Tencent signature smatphone games such as HoK and Peacekeeper Elite, and 2) the Share price 股价: HK$485.000
newly launched game Brawl Stars. In addition, we found that the Company has a good balance within their smartphone games portfolio structure in terms of game lifetime and cash generated capability. Stock performance 股价表现 We believe that WeChat Channels ("Channels") could further amplify WeChat's content ecosystem and enhance users' time spend. We view 50.0 % of return Channels more than a short video platform. In addition, we believe that 40.0 Channels will strengthen the Company's online advertising business and 30.0
fintech and business services in the long run. 20.0
10.0 证 We have revised up 2020-2022 shareholders' profit by 1.7%, 1.2% and 0.0 券 告 2.1%, respectively, due to expected strong performance of online games. In (10.0) addition, we are positive on the Company online advertising business due to 研 报 (20.0)
the development of Channels.
(30.0) 究 究 We maintain investment rating as "Buy" and revise up TP to HK$555.00. (40.0) 报
研 The new TP implies 39.9x, 35.4x and 31.3x 2020-2022 PER, respectively. Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20
告 HSI Index TENCENT
券 尽管预计用户使用时长将从隔离期的峰值下降，但 5 月中国手机游戏市场保持其增长势
EquityResearch Report 头。根据伽马数据 ，5 月中国手机游戏市场规模环比增长 11.9%，至人民币 176.8 亿元。
证 [Tab 我们相信新游戏的供应将成为 2020 年下半年手机游戏市场的增长引擎。
Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y le_I
我们分别上调 2020-2022 年在线游戏收入 2.4%、2.0%和 3.5%，由于：1）腾讯主打智能 股价变动 1 个月 3 个月 1 年
nfo1 手机游戏，如《王者荣耀》和《和平精英》预期强劲表现，和 2）新上架游戏《荒野乱斗》。 Abs. % 14.0 27.0 39.0 绝对变动 % 此外，我们发现公司智能手机游戏产品结构在游戏生命及变现能力方面具有良好平衡性。 ] Rel. % to HS Index
7.0 22.7 51.9 相对恒指变动 % 互 我们认为，微信视频号（“视频号”）可以进一步扩大微信的内容生态，并增加用户时长。 Avg. Share price(HK$) 445.1 420.2 369.4 联 我们认为视频号不仅仅是短视频平台。此外，我们认为，从长远来看，视频号将使公司的 平均股价（港元） 网 在线广告业务以及金融科技和企业服务受益。 Source: Bloomberg, Guotai Junan International.
行 由于预期在线游戏的强劲表现，我们分别上调 2020-2022 年股东利润 1.7%、1.2%和 2.1%。
业 此外，由于视频号的发展，我们对公司在线广告业务持乐观态度。 InternetSector
我们维持投资评级为“买入”并上调目标价至 555.00 港元。新目标价分别相当于 39.9 倍、
35.4 倍和 31.3 倍 2020-2022 年市盈率。 Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE
年结Profit] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率
[Tab 12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%) le_I 2018A 312,694 78,719 8.336 90.2 51.1 34.256 12.4 0.741 0.2 27.2 2019A 377,289 93,310 9.856 18.2 44.0 45.702 9.5 0.877 0.2 24.7 nfo2
2020F 479,267 120,260 12.655 28.4 34.9 57.608 7.7 1.126 0.3 24.5
中] 2021F 585,655 136,185 14.274 12.8 30.9 70.775 6.2 1.270 0.3 22.3 2022F 674,831 156,702 16.359 14.6 27.0 85.817 5.1 1.456 0.3 20.9 腾外 讯运 [Table_BaseData]Shares in issue (m) 总股数 (m) 9,553.2 Major shareholder 大股东 Naspers Ltd 31.0% 控 Market cap. (HK$ m) 市值 (HK$ m) 4,633,302.0 Free float (%) 自由流通比率 (%) 60.1 输 股 3 month average vol. 3 个月平均成交股数 (‘000) 21,915.9 FY20 Net gearing (%) FY20 净负债/股东资金 (%) (24.9) 52 Weeks high/low (HK$) 52 周高/低 (HK$) 505.000 / 312.200 FY20-FY22 PEG 2.1
Tencent(00700 HK) Source: the Company, Guotai Junan International.
See the last page for disclaimer Page 1 of 9
[Table_PageHeader] Tencent (00700 HK)
Industry Updates
] 1 r a M t h g i R _ e l b a T [
China’s mobile games market maintained its growth momentum in May, although user time spent online is expected to
have declined from its peak during the quarantine period. According to CNG, a third party data company, China’s mobile games market scale surged 11.9% mom in May, reaching RMB17.68 billion. We believe that the surge in growth was mainly due to 1) the extension of the Labor Day holiday in which people decreased their outdoor activities due to the COVID-19 outbreak environment; and 2) momentum from strong titles such as Hok and Peacekeeper Elite. Looking ahead, we believe that the new supply of game titles will be the main driver of mobile games industry growth in 2H20. The total amount of new licensed games 26 June 2020 approved by the State Administration of Press, Publications, Radio, Film and Television (SAPPRFT) in recent months has been generally stable, with 100, 106, 103, 110 and 109 domestic games licenses granted from January 2020–May 2020, respectively. 11 Tencent (the "Company") games have been approved by the SAPPRFT for new game licenses so far this year.
Figure-1: China Mobile Games Market Scale Figure-2: Amount of Licensed Games Approved by SAPPRFT
Market Scale of Mobile Game Market Approved Domestic Games in 2020 Approved Imported Games in 2020 Tencent Games RMB (bn) 18.00 120 110 17.7 109 106 103 17.50 100 100
17.00 80
] 2 r a M t h g i R _ e l b a T [
16.50
60 55 16.00 15.8 40 15.50 27
20 15.00
4 2 2 2 1 14.50 0 April.2020 May.2020 Jan.20 Feb.20 Mar.20 Apr.20 May.20 Jun.20
Source: CNG, Guotai Junan International. Source: SAPPRFT, Guotai Junan International.
We have revised up 2020-2022 online games revenue by 2.4%, 2.0% and 3.5%, respectively, due to expected strong
performance of Tencent’s top signature smartphone games, such as HoK and Peacekeeper Elite, and newly launched games such as Brawl Stars. We believe that gross revenue of Tencent's top games, such as Hok and Peacekeeper Elite could generate incremental cash flow in 2Q20, even when faced with the resumption of offline entertainment. According to
Sensor Tower, a third-party data company, Tencent’s strong titles PUBG mobile and Peacekeeper Elite were the top mobile (00700 HK) games by worldwide gross revenue for May 2020, generating more than US$226.0 million from in-game purchases. HoK was the second highest earning mobile game worldwide with more than US$204.5 million in gross revenue. We estimate gross revenue of Hok and PUBG mobile plus Peacekeeper Elite to grow at a range of 15%-18% qoq in 2Q20. For the Company's new 腾讯控股 games, Brawl Stars made US$17.5 million and accumulated 4.8 million downloads in a week after the game launched on June
9 2020. On overseas games development, Call of Duty, developed in partnership with Tencent's Timi Studio, surged to over 250 Tencent million downloads worldwide after launch. Looking ahead, we believe that Tencent's revenue growth of smartphone games will be further enhanced in 2H20, mainly due to 1) expected incremental cash flow generated by existed strong titles, such as HoK and Peacekeeper Elite; 2) strong pipeline of smartphone games in 2H20 is expected, such as DnF Mobile and League of Legends: Wild Rift; 3) deferral recognition of online games revenue; and 4) overseas games revenue expansion.
Figure-3: Gross Revenue of HoK Figure-4: Gross Revenue of PUBG + Peacekeeper Elite
(mn) Global Revenue (USD) (mn) Global Revenue (USD)
250 250 232.0 226.0
225.2 204.5 200 200
191.6
156.0 176.3 150 150 160.0 158.5 158.0 153.9 151.3 148.0
139.0
120.0 120.0 121.6 116.2 112.0
100 110.0 100
Report
50 50
0 0 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Company
Source: Sensor Tower, Guotai Junan International. Source: Sensor Tower, Guotai Junan International.
See the last page for disclaimer Page 2 of 9 [Table_PageHeader] Tencent (00700 HK)
Figure-5: Tencent’s Online Games Business Revenue and Figure-6:Tencent’s Revenue of Smartphone Games and PC
yoy Growth Client Games and yoy Growth] 1 r a M t h g i R _ e l b a T [
Revenue of Smart phone games Revenue of PC client games RMB (Million) - Online games yoy Smart phone games YoY PC client games YoY RMB (Million) 200,000 30% 180,000 50% 187,740 169,304 27.8% 45.0% 180,000 168,230 160,000 152,842 40% 160,000 146,600 140,000 135,950 140,000 30% 20% 120,000
23.9% 20.5% 26 June 2020 120,000 114,710 103,992 93,730 17.4% 20% 100,000 15.3% 100,000 14.8% 77,800 10.8% 11.6% 80,000 12.4% 10% 80,000 61,607 10.3% 10% 60,000 50,600 53,429 60,000 47,416 -4.0% 45,523 0% 40,000 -6.3% 40,000 6.2% -8.2% -10% 20,000 20,000
0 0% 0 -20% 2018A 2019A 2020F 2021F 2022F 2018A 2019A 2020F 2021F 2022F
Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.
We found that the Company has balanced it smartphone games portfolio structure in terms of game lifetime and cash
generated capability. We selected Tencent’s top 11 games in terms of iOS daily grossing revenue] 2 asr a at M 14t June.h g Wei R found_ e l thatb a T [
3 games have been operating for over 3 years, among those, HoK is still able to maintain its high cash flow generation momentum. For games released for less than 3 years, Peacekeeper Elite and Brawl Stars made US$1.5 million and US$1.8 million in gross revenue, respectively, as at 14 June. In addition, according to our research, the Company released 22, 24, 34 and 23 mobile games from 2016 to 2019, respectively. So far, 4 new smartphone games have been launched in 1H20 under the impact of the COVID-19 pandemic, but more new blockbuster smartphone games are expected in 2H20 in order to maintain new game revenue contribution efficiency. Hence, we believe that more highly expected smartphone games will appear in ''region I'' and further strengthen the Company's smartphone games portfolio. On the other hand, we believe player time spent and currency spend on the Company's long-life games, which is in ''region II and IV'', such as HoK, should not decline significantly even when offline entertainment has fully recovered. In addition, we are positive on games in ''region I'', as they are still in their early growth stage in which player spending is expected to grow constantly. Therefore, with the outstanding deployment of games portfolio from newly launched games to long-life games, we believe that the Company will maintain its
online games growth momentum in our forecasted period. (00700 HK)
Figure-7: Tencent’s smartphone games portfolio 腾讯控股 (USD) 2,000,000
1,800,000 Honor of Kings Tencent Brawl Stars 1,600,000 Peacekeeper Elite 1,400,000 The Outcast 1,200,000 Region I Region II King of chaos
1,000,000 Perfect World Mobile Region III Region IV QQ Dancer 800,000 CrossFire 600,000 Naruto Mobile
400,000 Contra:Return
200,000 QQ Speed Mobile
0 (year) 0 1 2 3 4 5 6
Source: QiMai data, Guotai Junan International.
WeChat Channels is expected to amplify WeChat's content ecosystem and increase user time spend on WeChat platform.
Channels allows content creators to share short videos up to 60 seconds in duration or share up to 9 images. In addition, WeChat Report has started to test Channels since January 2020 and have released a latest version in June. The new version of Channels added
four segments on its page, which are "Follow", "Friends Like", "Hot Trend" and "Nearby Video". For the "Friends Like" section,
Channels reminds users on the Discover page, in which a red dot beside the Channels button would appear if a friend of the user Company selects to like a video. We believe that this function will not only increase user interaction but also enhance the video's dissemination. We see Channels beyond a short video platform but a bridge, which connects between user to user, users to See the last page for disclaimer Page 3 of 9 [Table_PageHeader] Tencent (00700 HK)
content providers, and users to official accounts and mini programs. Furthermore, more online advertising inventory is expected to
be released on Channels. Therefore, with the expected enhancement of user interaction and] 1 timer a spenM tt , weh believeg i R tha_ te Channell b a s T [
will boost the development of the Company's online advertising and fintech and business services segments in the long run.
Figure-8: The link between WeChat Channels to WeChat Official Accounts and WeChat Mini-Programs
WeChat Channels Page
Entry of WeChat Channels 26 June 2020
Channels Account Official Account Mini-Program
] 2 r a M t h g i R _ e l b a T [
Deal
Source: the Company, Guotai Junan International.
Profit Revision
We have revised up 2020-2022 shareholders' profit by 1.7%, 1.2% and 2.1%, respectively, due to expected strong (00700 HK) performance of online games business. We believe that Tencent's online games business will maintain its strong growth momentum with 1) expected outstanding performance of its existing smartphone games and 2) rich mobile games pipeline in 2H20. In addition, we see that the Company has a relatively strong games portfolio, with impressive performance from newly 腾讯控股 launched games and stable growth momentum from long-life games. As for WeChat’s ecosystem, we view Channels more than a short video platform, more like a bridge. A bridge that could enhance user interaction and increase time spent on the platform. Tencent Therefore, we foresee that Channels has room for further advertising inventory release, which could strengthen the Company’s online advertising business and payment business.
Table-1: Financial Estimations Revisions
OLD NEW CHANGE RMB (Million) 2020F 2021F 2022F 2020F 2021F 2022F 2020F 2021F 2022F Total revenue 473,280 579,776 663,673 479,267 585,655 674,831 1.3% 1.0% 1.7% - VAS revenue 248,328 291,176 321,900 254,316 297,055 333,058 2.4% 2.0% 3.5% - Advertising 84,243 111,559 129,502 84,243 111,559 129,502 0.0% 0.0% 0.0% revenue - FinTech and 132,692 168,338 203,516 132,692 168,338 203,516 0.0% 0.0% 0.0% Business Services
Net Profit 118,287 134,616 153,471 120,260 136,185 156,702 1.7% 1.2% 2.1%
Report
EPS (RMB) 12.448 14.110 16.022 12.655 14.274 16.359 1.7% 1.2% 2.1%
Source: Guotai Junan International.
Company
See the last page for disclaimer Page 4 of 9 [Table_PageHeader] Tencent (00700 HK)
Valuation
] 1 r a M t h g i R _ e l b a T [
We maintain investment rating as "Buy" and revise up TP to HK$555.00. The new TP implies 39.9x 2020 PER, 35.4x 2021
and 31.3x 2022 PER. We believe that the Company will maintain its growth momentum of its online games business. Furthermore, we see that WeChat has high growth potential via Channels.
Figure-9: Tencent’s PE Graph Figure-10: Tencent’s PER Range
Forward P/E Avg 26 June 2020 (x) (x) max min avg 60.0 +1 S.D. -1 S.D. 60.00 +2 S.D. -2 S.D. 52.63 50.0 50.00 44.07 43.80 43.00 40.0 40.07 39.58 38.30 38.25 36.65 40.00 35.65 35.24 32.26 36.91 30.0 30.96 31.05 34.57 31.11 31.43 33.08 30.38 30.00 29.7632.65 20.0 25.97 25.75 27.38 26.18 26.73 26.69 25.00 25.91 25.33 20.00 21.47 10.0 19.94 17.21 10.00
0.0
10 11 12 13 16 17 18 19 14 15 20
------0.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan YTD
] 2 r a M t h g i R _ e l b a T [
Source: Bloomberg. Source: Bloomberg.
(00700 HK)
腾讯控股 Tencent
Report
Company
See the last page for disclaimer Page 5 of 9 [Table_PageHeader] Tencent (00700 HK)
Table-2: Peers Comparison PER (x) PBR (x) P/S PEG Market Cap
] 1 r a M t h g i R _ e l b a T [ Local currency Company Ticker Currency Price 20F 21F 22F 20F 21F 22F 20F 20F-22F (million) US Online Game Companies
Glu Mobile Inc GLUU US USD 9.250 29.2 22.0 13.3 5.2 4.2 3.2 3.0 0.6 1,562 Sciplay Corp-Class A SCPL US USD 14.540 15.5 12.8 14.7 5.0 3.1 2.2 3.5 5.8 1,836 Take-Two Interactive Softwre TTWO US USD 139.870 39.1 36.5 24.6 6.3 5.2 4.4 4.3 1.1 15,937 Electronic Arts Inc EA US USD 130.870 12.6 26.0 22.9 5.1 4.7 4.3 5.3 2.0 37,784 Activision Blizzard Inc ATVI US USD 75.580 27.5 25.0 22.0 4.1 3.6 3.1 8.1 2.3 58,233
Netease NTES US USD 437.460 24.5 21.3 18.9 5.1 4.3 3.7 6.2 1.8 60,009 26 June 2020 Simple Average 24.7 23.9 19.4 5.1 4.2 3.5 5.1 2.3 Weighted Average 24.2 24.8 21.2 4.8 4.2 3.7 6.4 2.0
HK Online Game Companies Kingsoft Corp Ltd 3888 HK HKD 35.900 111.5 65.4 37.9 2.8 2.5 2.0 6.1 1.6 49,281 Forgame Holdings Ltd 484 HK HKD 3.180 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 507 Linekong Interactive Group C 8267 HK HKD 0.400 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 147 Idreamsky Technology Holding 1119 HK HKD 4.620 7.8 7.7 7.0 1.3 n.a. n.a. 1.5 1.6 5,866 Tencent 700 HK HKD 485.000 35.8 29.0 24.0 7.7 6.1 4.9 9.0 1.6 4,633,519 Boyaa Interactive Int. 434 HK HKD 0.940 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 672 Fingertango Inc 6860 HK HKD 0.325 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 628 Leyou Technologies Holdings 1089 HK HKD 2.560 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7,890 Fire Rock Holdings Ltd 1909 HK HKD 4.000 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1,280 Digital Hollywood Interactiv 2022 HK HKD 0.088 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 176
] 2 r a M t h g i R _ e l b a T [ Ourgame International Holdin 6899 HK HKD 0.500 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 539 Baioo Family Interactive Ltd 2100 HK HKD 1.000 6.1 4.7 3.6 1.4 1.2 1.0 1.8 0.2 2,751 Feiyu Technology Internation 1022 HK HKD 0.163 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 252 Friendtimes Inc 6820 HK HKD 3.740 12.3 9.9 8.9 3.8 2.8 2.2 3.1 0.7 8,182 IGG 799 HK HKD 6.090 7.3 6.8 6.0 2.1 1.7 1.4 1.5 0.7 7,527 Zengame Technology Holding 2660 HK HKD 1.080 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1,100 Cmge Technology Group Ltd 302 HK HKD 3.800 10.2 9.2 7.1 n.a. n.a. n.a. 1.9 0.5 8,855 Xd Inc 2400 HK HKD 29.500 21.0 16.0 12.3 5.0 3.9 3.1 3.2 0.7 12,627 Netdragon 777 HK HKD 22.950 10.6 8.2 6.9 1.8 1.5 1.3 1.8 0.5 12,942 Simple Average 24.7 17.4 12.6 3.2 2.8 2.3 3.3 0.9 Weighted Average 36.3 29.1 24.0 7.6 6.0 4.8 8.8 1.6
Advertising Companies
China Literature Ltd 772 HK HKD 53.250 36.9 31.7 27.0 2.4 2.2 2.0 5.4 2.6 54,090 Momo Inc-Spon Adr MOMO US USD 18.460 8.5 6.4 6.0 2.1 1.7 1.4 1.6 0.4 3,853 Bilibili Inc-Sponsored Adr BILI US USD 44.030 n.a. n.a. 278.7 16.3 18.6 17.3 9.9 n.a. 15,209 Sohu.Com Inc SOHU US USD 9.020 n.a. 39.0 25.6 1.2 1.1 0.8 0.2 n.a. 333
Weibo WB US USD 32.960 16.1 12.9 11.5 2.6 2.1 1.7 4.5 0.9 7,464 (00700 HK)
Bitauto BITA US USD 15.780 n.a. 24.0 16.0 0.7 0.7 0.7 0.8 n.a. 1,121 Cheetah Mobile CMCM US USD 1.810 n.a. n.a. n.a. 0.3 0.3 n.a. 0.8 n.a. 252
58.com WUBA US USD 54.010 21.0 14.4 13.6 1.7 1.7 1.6 3.6 0.9 8,098 腾讯控股 Soufun SFUN US USD 12.350 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 111 Phoenix New Media FENG US USD 1.520 101.3 19.0 8.0 0.3 n.a. n.a. 0.5 0.4 111 Twitter Inc TWTR US USD 31.730 95.3 50.0 37.8 2.8 2.7 2.5 7.6 1.6 24,896
Sina SINA US USD 35.830 15.7 12.8 10.3 0.9 0.7 0.7 1.1 0.7 2,343 Tencent Facebook FB US USD 234.020 27.9 21.5 18.0 5.5 4.5 3.6 8.6 1.1 667,270 Simple Average 40.2 23.3 41.5 3.1 3.3 3.3 3.7 1.0 Weighted Average 30.4 22.5 24.2 5.6 4.7 3.8 8.5 1.2
E-commerce Companies Pinduoduo Inc-Adr PDD US USD 84.500 (119.5) 156.5 54.5 36.3 30.6 22.5 14.7 n.a. 101,199 Alibaba* BABA US USD 226.220 32.5 27.1 20.9 5.7 4.7 3.9 7.1 1.0 606,886 VIPSHOP VIPS US USD 20.240 15.9 13.2 12.3 3.4 2.8 2.2 1.0 1.2 13,610 EBay EBAY US USD 48.770 14.6 13.4 12.8 13.4 11.0 10.4 3.3 2.1 34,270 JD.com JD US USD 59.840 46.0 30.5 23.5 6.4 5.2 4.2 0.9 1.2 92,464 AMAZON MZN US USD 2734.400 82.9 52.6 38.0 16.0 12.4 9.2 3.9 1.7 1,363,853 Simple Average 12.1 48.9 27.0 13.5 11.1 8.7 5.2 1.4 Weighted Average 56.8 48.6 32.9 13.6 10.7 8.1 5.2 1.5
Search Engine Companies Sogou Inc-Adr SOGO US USD 4.110 63.2 15.4 10.8 1.5 1.3 1.2 1.4 0.4 1,598
Alphabet Inc-ClA GOOGL US USD 1432.700 27.2 21.5 17.6 4.6 3.9 3.3 7.1 1.1 977,728 Baidu Inc - Spon Adr BIDU US USD 121.370 19.1 14.5 11.8 1.7 1.5 1.3 2.7 0.7 41,832
Simple Average 36.5 17.1 13.4 2.6 2.2 1.9 3.7 0.8 Report Weighted Average 26.9 21.2 17.4 4.5 3.8 3.3 6.9 1.1
Overall Average 27.6 26.3 22.9 5.5 4.8 3.9 4.2 1.3
Overall Weighted Average 34.8 29.4 24.2 7.3 5.9 4.8 7.2 1.5 Company Source: Bloomberg. Note: * represents figures of FY19/FY20/FY21
See the last page for disclaimer Page 6 of 9 [Table_PageHeader] Tencent (00700 HK)
Table-3: Technical Terms Glossary
定义 ] 1 r a M t h g i R _ e l b a T [ Abbreviation Definitions ACG Advanced Casual Game 高级休闲游戏 ARPG Action Role Playing Game 动作角色扮演类游戏 ARPU Average Revenue Per User 平均每月用户收入
DAU Daily Active User Accounts 日活跃用户数 26 June 2020 DnF DnF Mobile 地下城与勇士 FPS First Person Shooting 第一人称射击游戏 HoK Honour of Kings 王者荣耀 IAAS Infrastructure as a Service 基础即服务 LOL League of Legends 英雄联盟 MCG Mini Casual Game 小型休闲游戏 MMO Racing Massive Multiplayer Online Racing 大型多人在线赛车游戏 MMOFPS Massive Multiplayer Online First-Person Shoot 大型多人在线第一人称射击游戏
MMOG Massive Multiplayer Online Game 大型多人在线游戏] 2 r a M t h g i R _ e l b a T [
MMORPG Massive Multiplayer Online Role-Playing Game 大型多人在线角色扮演游戏 MMORTS Massive Multiplayer Online Real-Time Strategy 大型多人在线实时战略游戏 MOBA Multiplayer Online Battle Arena 多人在线战术竞技游戏 PAAS Platform as a Service 平台即服务 RPG Role-Playing Game 角色扮演游戏 SAAS Software as a Service 软件即服务 SNS Social Network Site 社交网站
VAS Value-Added Services 增值服务 Source: the Company, Guotai Junan International.
(00700 HK)
腾讯控股 Tencent
Report
Company
See the last page for disclaimer Page 7 of 9 [Table_PageHeader] Tencent (00700 HK)
Financial Statements and Ratios
[Table_IncomeStatement] [Table_BalanceSheet] ] 1 r a M t h g i R _ e l b a T [ Income Statement Balance Sheet
Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F
VAS 176,646 199,991 254,316 297,055 333,058 Fixed Asset 47,076 66,368 79,716 88,906 96,918
Online advertising 58,079 68,377 84,243 111,559 129,502 Intangible assets 56,650 128,860 131,140 134,412 138,753
FinTech and Business Services 73,138 101,355 132,692 168,338 203,516 Investment in JCE & associates 227,790 221,894 219,007 215,761 217,945
Others 4,831 7,566 8,016 8,702 8,756 Financial assets at FV via P&L 91,702 128,822 141,704 155,875 171,462
Total Revenue 312,694 377,289 479,267 585,655 674,831 Financial assets at FV via OCI 43,519 81,721 89,893 98,882 108,771 26 June 2020 Cost of revenues (170,574) (209,756) (255,152) (318,387) (368,116) Deferred income tax assets 15,755 18,209 20,030 22,033 24,236
Gross profit 142,120 167,533 224,115 267,267 306,715 Prepayments, deposits and other 21,531 23,442 25,786 28,365 31,201
Others 2,418 30,702 33,454 12,814 13,412 Interest Income 3,940 4,569 6,314 7,573 8,598 Total Non-current Assets 506,441 700,018 740,730 757,047 802,698 Other gains, net 16,714 19,689 21,281 21,800 22,979
S&M (24,233) (21,396) (33,479) (41,948) (49,157) Accounts receivable 28,427 35,839 44,039 42,725 50,355
G&A (41,522) (53,446) (68,284) (81,913) (91,528) Other receivables 18,493 27,840 36,192 38,002 39,902
Operating Profit 97,648 118,694 151,206 173,803 198,720 Cash & Cash Equivalents 97,814 132,991 234,867 385,563 520,735
Finance cost, net (4,669) (7,613) (8,118) (10,087) (11,402) Term deposits 62,918 46,911 58,559 62,517 68,717
Share of associate / JC 1,487 (1,681) (626) (3,560) (2,924) Others 9,428 10,387 11,487 12,692 13,770
Profit Before Tax 94,466 109,400 142,462 160,156 184,394 Total Current Assets 217,080 253,968 385,144 541,498 693,479
Income Tax (14,482) (13,512) (19,767) (21,094) (24,271)
] 2 r a M t h g i R _ e l b a T [ profit After Tax 79,984 95,888 122,695 139,063 160,123 Total Assets 723,521 953,986 1,125,874 1,298,545 1,496,178
Non-controlling Interest (1,265) (2,578) (2,435) (2,877) (3,421)
Shareholders' Profit / Loss 78,719 93,310 120,260 136,185 156,702 Accounts payable 73,735 80,690 89,411 92,524 101,221
Basic EPS 8.336 9.856 12.655 14.274 16.359 Short term borrowings 26,834 22,695 15,886 15,092 14,338 Accrued exp. & other payables 33,312 45,174 43,134 52,709 60,735
[Table_CashFlowStatement]Cash Flow Statement Notes payable 13,720 10,534 3,160 3,476 3,650
Year end 31 Dec (RMB m) 2018A 2019A 2020F 2021F 2022F Deferred revenue 42,375 60,949 85,165 94,070 108,394
Profit after taxation 79,984 95,888 122,695 139,063 160,123 Others 12,459 20,114 23,424 23,850 24,315
Income tax expense 14,482 13,512 19,767 21,094 24,271 Total Current Liabilities 202,435 240,156 260,181 281,722 312,653
Depreciation & Amortisation 34,248 44,673 55,318 59,407 63,045
Interest income (4,569) (6,314) (7,573) (8,598) (9,711) Notes payable 51,298 83,327 87,493 91,868 96,461
Interest expense 4,898 7,690 9,228 10,428 11,575 Long term borrowings 87,437 104,257 125,108 137,619 144,500
Sharebase compensation 7,869 10,127 11,023 13,470 15,521 Deferred income tax liabilities 10,964 12,841 18,785 20,046 23,065
Share change of associates & JV (1,487) 1,681 626 3,560 2,924 Deferred revenue 7,077 7,334 9,316 11,384 13,118
Changes in working capital Others 8,103 17,247 19,009 19,237 19,508 (00700 HK)
4,491 15,330 14,252 20,947 21,414
Income tax paid (14,521) (17,228) (21,825) (25,184) (33,856) Total Non-current Liabilities 164,879 225,006 259,712 280,155 296,653
Others (14,459) (16,769) (7,084) (7,528) (7,026)
Cash from Operating Activities 110,936 148,590 196,428 226,658 248,279 Total Liabilities 367,314 465,162 519,893 561,877 609,306 腾讯控股
Share premium 23,121 31,269 34,756 36,656 38,652
CAPEX (51,620) (52,632) (55,386) (53,770) (56,459) Other reserves 729 16,786 18,465 20,311 22,342 Tencent Loans to investees and others (1,778) (5,030) (2,498) (3,102) (3,543) Reserves 299,660 384,651 494,207 618,272 761,026 Associates & JV investments (39,699) (14,957) (10,841) (10,463) (20,592) Total Shareholders' Equity 323,510 432,706 547,428 675,238 822,020
Change in financial assets 0 (10,169) 0 0 0 Minority Interest 32,697 56,118 58,553 61,430 64,852
Change in term deposits (20,828) (2,994) (11,648) (3,958) (6,200) Total Equity 356,207 488,824 605,981 736,669 886,872
Change of FA at FV via OCI 4,555 (9,425) (8,172) (8,989) (9,888)
Change of FA at FV via P&L (42,887) (24,083) (12,882) (14,170) (15,587) [Table_FinancialRatio] Others 344 3,120 (8,532) (11,169) (11,137) Financial Ratios
Cash from Investing Activities (151,913) (116,170) (109,959) (105,622) (123,408) 2018A 2019A 2020F 2021F 2022F
Gross margin (%) 45.5 44.4 46.8 45.6 45.5
Dividends to shareholders (620) (8,315) (10,704) (12,121) (13,947) Operating margin (%) 31.2 31.5 31.5 29.7 29.4
Change in borrowings 9,961 (3,776) 22,216 12,670 7,032 Net margin (%) 25.2 24.7 25.1 23.3 23.2
Net change in notes payable 27,881 26,737 (3,207) 4,691 4,767 ROE (%) 27.2 24.7 24.5 22.3 20.9
Equity issuance of subsidiaries 7,238 440 7,962 9,554 11,465 ROA (%) 12.5 11.4 11.8 11.5 11.5
Others (13,573) (13,414) (9,467) 5,398 (9,430)
Cash from Financing Activities 30,887 1,672 6,800 20,192 (113)
Net Changes in Cash (10,090) 34,092 93,268 141,228 124,758 Report
Cash at Beg of Year 105,697 97,814 132,991 234,867 385,563
FX change 2,207 1,085 8,607 9,468 10,415
Cash at End of Year 97,814 132,991 234,867 385,563 520,735 Company
Source: the Company, Guotai Junan International.
[Table_CompanyRatingDefinition] See the last page for disclaimer Page 8 of 9 [Table_PageHeader] Tencent (00700 HK)
Company Rating Definition
The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [
Time Horizon: 6 to 18 months
Rating Definition
Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%;
or the fundamental outlook of the company or sector is favorable. 26 June 2020 Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.
Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.
Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;
] 2 r a M t h g i R _ e l b a T [
or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.
[Table_DISCLOSUREOFINTERESTS]DISCLOSURE OF INTERESTS (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for GUOTAI JUNAN I (01788 HK),JINSHANG BANK (02558 HK),ZHONGLIANG HLDG (02772 HK),BINHAI INVESTMENT (02886 HK),HAITIAN ANTENNA (08227 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market
capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are making, or will make a market in the securities in respect of the issuer mentioned in this
Research Report. (00700 HK) (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.
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DISCLAIMER Tencent This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).
Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.
Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.
This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.
© 2020 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved.
27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Report Tel.: (852) 2509-9118 Fax: (852) 2509-7793 Website: www.gtja.com.hk
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See the last page for disclaimer Page 9 of 9