12/11/2018-6

The price cuts and the tide retire

Before the performance, the brokerage company continued to cut the profit forecast. Tencent (00700)’s quarterly results finally exceeded market expectations, and did not trigger a new round of large-scale price cuts, helping the stock price to stabilize. After analyzing the performance of 10 major brokerages, Tencent’s gaming business prospects have not broken through, but it is recognized that its plans to develop the industrial Internet can help other revenues such as payment and cloud business grow rapidly.

The 10 brokers still all have a “Buy" equal rating, and 4 of them have lowered their target price after the performance. The original target price is more aggressive or has not been adjusted in the past month. The Macquarie target price is still above 500 yuan. , continued is the most cattle brokerage.

Tencent’s share price opened 4% higher today, up 5.8% for the whole day, and the turnover reached 13 billion yuan. Beishui flowed into the shares. The turnover of Hong Kong stocks was over 1.9 billion yuan, and the net capital was nearly 300 million yuan.

Although the annual growth of Tencent’s mobile game revenues was a surprise to the market, the overall online game revenue decreased by about 3% year-on-year, and the commercialization of the game in the Mainland was not seen. The brokers did not change their cautious view on game revenue growth.

Moto admits that Tencent’s outlook for the next 12 months is subject to change due to a number of factors. The suspension of the Mainland’s approval for eight months has also caused an accident. It is expected that the authorities will find a suitable way to respond to “social responsibility" in the overall game industry before re-release. To make the restart time more variable, the bank is still expected to resolve before the end of next year.

Industry Internet is recognized

Tencent’s revenue growth during the period was mainly driven by advertising and other income. Brokers generally agreed that Tencent’s performance meeting focused on promoting digitalization of the industry, which could inject momentum into long-term revenue growth. Goldman Sachs thus slightly increased its revenue forecast by about 1% in the next two years. It also believes that the company will benefit from the tax cuts, and it will beat the impact of the fall in gross profit margins. It will raise the earnings per share for the next three years by about 2% to 3%.

Moto said that Tencent’s development of the industry Internet is still at an extremely early stage. Relevant investment will bring short-term pain, which will add pressure to the profit prospects in the next few years, but it will become a long-term revenue growth engine, thus lowering the profit forecast for the next two years. The bank also said that Tencent is no longer the first choice among mainland large-scale network stocks. Because Alibaba (BABA) is better able to control its own profitability than Tencent, it is more optimistic about Ali.