Mobile-迈达斯投资 (MIC)-前海邁達斯基金 (MIF)

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2012.9.7 Tencent (00700 HK) WoP First, Cross-selling follows, maintain “Buy”

2012.9.7 Tencent (00700 HK) WoP First, Cross-selling follows, maintain “Buy”
  • Regions: Mainland China, Hong Kong
  • Markets:HKEx
  • Industries: Internet
  • Target Companies:00700 HK Tencent Holdings

Detailed

Company Report: Tencent (00700 HK) Dundas Deng 邓京晶
公司报告：腾讯控股(00700 HK)
 
WoP First, Cross-selling follows, maintain “Buy”
平台战争为先，交叉销售随后，维持“买入”

 

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Summary: Tencent's 2Q12 top line growth was slightly better than expected as revenuefrom online advertising spiked. Online games, Community VAS, Online Ads and eCommerce contributed 52.9%, 21.1%, 8.4% and 8.1% of 2Q12 revenue respectively. Fee-based paying members were down 6.0% QoQ and up 2.8% YoY and the growth is slowing down as the growth of the general internet population slowed down. GPM was down to 59.0% and we expect FY12 GPM to be 58.5%.

 

Slower but firm revenue growth in core sector and faster growth in sub-sectors is expected. Revenue from eCommerce business was up 13.9% QoQ to RMB 857.5 million and contribution from AD increased 0.8ppts YoY. Top-line growth to remain strong at a CAGR of 31.4% in FY12-14. Diluted EPS to grow at a CAGR of 22.5% in FY12-14. SG&A costs to increase 44.3% in FY12, but cash position remains strong for potential M&A.
 
Tencent will lead the War of Platforms (WoP) and high growth in sub-segments is expected to compensate for part of the slowdown in the gaming market. We slightly adjust Tencent's TP based on the assumption of increasing costs in both its core business unit and other business units and slightly lower net profits. We maintain Tencent's “Buy” rating and slightly decrease its TP to HK$270.0, representing a 26.6x 13PE and 1.5x 11-14 PEG. Key risks include higher SG&A costs and slower roll-out of key ACG games.

TAG:  MIG Report Tencent Internet
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