16/10/2018-10

Game approval renewal

The mainland has not restarted the game version approval, which has caused Tencent (00700) to lower its quarterly revenue and target price forecasts by at least four foreign banks in two weeks. Daiwa also predicts that the mobile game business, which accounts for more than 40% of revenue, will be annual. It recorded a retrogression on a quarterly basis and lowered the target price by 6% to 375 yuan.

Tencent’s share price fell by a maximum of 3.4% yesterday. However, the tail market received support of about 2 billion yuan. It only fell 0.5% to 281.4 yuan and traded 7 billion yuan.

A program on CCTV last Friday mentioned that “a large number of rural children are being abandoned by mobile games." In order to recall the children who are stuck by online games, the regulatory authorities must take more measures and fight the boxing, making the market worried that the government will launch More measures to scale the game market, Tencent and other game stocks continued to be under pressure.

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Tencent will announce its third-quarter (July-September) results on November 14. After UBS and JP Morgan Chase lowered their quarterly results on Wednesday, Daiwa also lowered the online game revenue of the group this year and next. From 7% to 16%, it is estimated that the income of mobile games in the third quarter will fall to about 14.6 billion yuan, equivalent to 20% year-on-year and 17% quarter-to-quarter.

Cui Hengxu, head of Internet research at Dahe China, explained that Tencent’s game business is still unclear until the game version number was re-launched in the Mainland. In addition, the “food chicken” mobile game “Jesus Survival”, which has not yet been commercialized, continues to attract users of other platforms, resulting in dragging. Low contribution to other games. However, the bank maintains a positive outlook for Tencent’s long-term growth potential, so it maintains a “Buy” rating and its target price is reduced from RMB 400 to RMB 375.

Credit Suisse has already lowered Tencent’s quarterly and full-year earnings forecasts as early as September, when it lowered its target price by 4% to 453 yuan. Zhuang Yaohong, head of Internet industry research in the Asia-Pacific region (excluding Japan), said that although the mainland has suspended the approval of the game version, Tencent currently has more than 10 commercial licensed games to be put on the shelves, which will help ease the pressure on the game business. The view is still positive, so Tencent will continue to be included in the Asia Pacific Focus List.