$TENCENT (00700.HK)$
(My own Tencent model, please bear with me if it seems amateurish.)
This quarter’s earnings report from Tencent was fairly standard. Although there was a sequential decline, overall, the results were still solid. Let’s break it down.
On the revenue side, total revenue increased by 20% year-over-year. Mobile gaming revenue grew by 13.37% year-over-year, PC gaming revenue increased by 0.81%, and social advertising revenue rose by 27.77%. Even amid the education sector crackdown, this ad revenue growth exceeded expectations. Financial services revenue surged by 40.29% year-over-year, maintaining strong growth momentum.
In terms of gross profit, the overall gross margin stood at 45.38%, declining by about 1 percentage point year-over-year. Within that, value-added services saw a decrease of 0.75 percentage points, while online advertising fell the most, dropping by 2.67 percentage points, showing some impact of the education sector adjustments. FinTech performed impressively, with its gross margin increasing by 2.1 percentage points year-over-year, resulting in a whopping 55% year-over-year increase in FinTech gross profit.
Regarding profitability, the operating profit margin was 38%, an increase of 3.8 percentage points year-over-year. Tencent's operational efficiency improved significantly, with adjusted net profit reaching RMB 34.039 billion, up 12.89% year-over-year. The adjusted net profit margin was 24.6%, down 1.6 percentage points year-over-year.
Commentary: Tencent's gaming revenue in Q2 remained relatively stable, with online advertising maintaining double-digit growth, and the FinTech segment shining brightly, with both revenue and profit margins growing. Gross profit contribution from FinTech has exceeded 20% for two consecutive quarters. Adjusted net profit growth came in at 13%, surpassing market expectations (7-12%). Overall, considering the current economic and market environment, the results were quite good...