External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<div><div><div><div><ul><li>We expect Tencent’s 4Q22E results to be largely inline with our previous forecasts, except slightly severe impact on ad and FBS businesses from opening-up in Dec 2022.</li><li>We slightly adjust FY22/4Q22E total revenue forecast down by 1/3%; but remain positive on the revenue recovery trajectory in FY23/24E, due to consumption recovery which should benefit Tencent’s consumer internet business, incremental contribution from Video Account monetization, and quality games pipeline.</li><li>We raise FY23/24E non-IFRS net income forecast by 1/2%, reflecting improved outlook of high-margin gaming and ad businesses, which should lead to better GPM in FY23/FY24E. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We expect Tencent’s 4Q22E results to be largely inline with our previous forecasts, except slightly severe impact on ad and FBS businesses from opening-up in Dec 2022.We slightly adjust FY22/4Q22E total revenue forecast down by 1/3%; but remain positive on the revenue recovery trajectory in FY23/24E, due to consumption recovery which should benefit Tencent’s consumer internet business, incremental contribution from Video Account monetization, and quality games pipeline.We raise FY23/24E non-IFRS net income forecast by 1/2%, reflecting improved outlook of high-margin gaming and ad businesses, which should lead to better GPM in FY23/FY24E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent  (700 HK) – What next to look forward to?

Thematic (Sector/Industry)

<ul><li>The NPPA released this year’s first batch of domestic game licenses on 17 January.</li><li>88 new games were approved and 24 legacy games received approval for changes of operation.</li><li>This is the highest number of domestic game license approved since the resumption of license approval in Apr 2022, showing further normalizing trend for game licenses approval. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

The NPPA released this year’s first batch of domestic game licenses on 17 January.88 new games were approved and 24 legacy games received approval for changes of operation.This is the highest number of domestic game license approved since the resumption of license approval in Apr 2022, showing further normalizing trend for game licenses approval. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet – Game license approval further normalises

<ul><li>China online game market revenue decreased by 10% YoY to RMB266bn in 2022 (2021: +6% YoY), as per CNG.</li><li>Apart from high base impact, the main causes were the suspension of game license approval and strengthening minor protection.</li><li>4Q22 China online gaming revenue continued to decline by 2% QoQ and 19% YoY to RMB58bn (3Q22: -19% YoY). </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

China online game market revenue decreased by 10% YoY to RMB266bn in 2022 (2021: +6% YoY), as per CNG.Apart from high base impact, the main causes were the suspension of game license approval and strengthening minor protection.4Q22 China online gaming revenue continued to decline by 2% QoQ and 19% YoY to RMB58bn (3Q22: -19% YoY). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet – 2022 online game market recap

<ul><li>Continue to support digital economy development </li><li>Encouraging technology breakthroughs, innovations, and overseas expansion. </li><li>Business model robustness, operating leveraging improvement, and ability to expand to new revenue streams will be the key stock alpha drivers.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Continue to support digital economy development Encouraging technology breakthroughs, innovations, and overseas expansion. Business model robustness, operating leveraging improvement, and ability to expand to new revenue streams will be the key stock alpha drivers.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet – Quality growth and further digitization penetration provide growth support

<ul><li>In our last report dated 17 October, we highlighted a list of 21 long ideas.</li><li>The basket (equal weighted) of these 21 stocks underperformed MSCI China index by 5.4ppt, delivering 0.2% return (vs MSCI China 5.6%).</li><li>China Meidong Auto and Innovent Biologics delivered over 20% of return, and 4 of our 21 long ideas outperformed the benchmark.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

In our last report dated 17 October, we highlighted a list of 21 long ideas.The basket (equal weighted) of these 21 stocks underperformed MSCI China index by 5.4ppt, delivering 0.2% return (vs MSCI China 5.6%).China Meidong Auto and Innovent Biologics delivered over 20% of return, and 4 of our 21 long ideas outperformed the benchmark.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CMBI Research Focus List (November Edition) – Our best high conviction stock ideas

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

Tencent (700 HK) – What next to look forward to?

We expect Tencent’s 4Q22E results to be largely inline with our previous forecasts, except slightly severe impact on ad and FBS businesses from...

CMB International

China Internet – Game license approval further normalises

The NPPA released this year’s first batch of domestic game licenses on 17 January. 88 new games were approved and 24 legacy games received approval...

CMB International

China Internet – 2022 online game market recap

China online game market revenue decreased by 10% YoY to RMB266bn in 2022 (2021: +6% YoY), as per CNG. Apart from high base impact, the main causes...

CMB International

China Internet – Quality growth and further digitization penetration provide growth support

Continue to support digital economy development. Encouraging technology breakthroughs, innovations, and overseas expansion.

CMB International

CMBI Research Focus List (November Edition) – Our best high conviction stock ideas

In our last report dated 17 October, we highlighted a list of 21 long ideas.The basket (equal weighted) of these 21 stocks underperformed MSCI...

CMB International

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