股 票 研 [Table_Title] Jason Zhou 周桓葳 Company Report: Tencent (00700 HK) 究 (852) 2509 5347 Equity Research 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 Company Report 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$555.00. (40.0) 报 研 The new TP implies 39.9x, 35.4x and 31.3x 2020-2022 PER, respectively. Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 告 HSI Index TENCENT 券 尽管预计用户使用时长将从隔离期的峰值下降，但 5 月中国手机游戏市场保持其增长势 Equity Research Report 头。根据伽马数据 ， 月中国手机游戏市场规模环比增长 ，至人民币 亿元。 5 11.9% 176.8 证 [Tab 我们相信新游戏的供应将成为 2020 年下半年手机游戏市场的增长引擎。 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y le_I 我们分别上调 2020-2022 年在线游戏收入 2.4%、2.0%和 3.5%，由于：1）腾讯主打智能 股价变动 1 个月 3 个月 1 年 nfo1 手机游戏，如《王者荣耀》和《和平精英》预期强劲表现，和 2）新上架游戏《荒野乱斗》。 Abs. % 14.0 27.0 39.0 绝对变动 % 此外，我们发现公司智能手机游戏产品结构在游戏生命及变现能力方面具有良好平衡性。 ] Rel. % to HS Index 7.0 22.7 51.9 相对恒指变动 % 互 我们认为，微信视频号（“视频号”）可以进一步扩大微信的内容生态，并增加用户时长。 Avg. Share price(HK$) 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。 Internet Sector 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.