CICC Morning Notes 20081107 - Tencent Holdings (700.HK)

Market Information           

CICC Morning Notes

2008/11/07

Please find the English highlights of CICC research reports to be published today as follows:

1. Tencent Holdings (700.HK/HK$48.25): A Strong Q3 Driven by New Games – BUY

Details as follow:

1. Tencent Holdings (700.HK/HK$48.25): A Strong Q3 Driven by New Games – BUY

Key Points:

-       Q2 revenue may reach Rmb 2bn, representing QoQ growth of 25%+ and YoY growth of almost 100%. Gaming sector could be the main growth engine with PCU of two new games, Dungeon and Fighter, and Crossfire, exceeding 800k and 600k respectively.

-       Margin decline. Gross margin declined because of the increasing percentage of licensed games and also the increasing content costs related to Olympic. Quick operating costs expansion due to the increasing S&M expenses for new games and Olympic.

-       EPS for Q3 may reach Rmb 0.40, beating Bloomberg consensus for 8%.

-       Our 2008 revenue forecast is Rmb7,141 mn and 2008 EPS HK$1.70. Our 2009 revenue forecast is Rmb9,348mn and 2009 EPS HK$2.27. Stock traded at low level of its P/E range.

For details, please find the full report from CICC Research Report Reader. Should you have any questions, please feel free to contact your account manager!