Tencent In The "Epidemic": The "Home Economy" Is Better Than Expected.

Hong Kong stock "stock king" came back. As of May 13th closing, Tencent shares closed at Four hundred and twenty-nine point six Hong Kong dollar / share market value reached Four point one Trillion Hong Kong dollars. Tencent shares rose to HK $438 per share, the last time it happened in March 2018.

At the beginning of 2018, Tencent's stock price reached a record high of about HK $474 / share, but its share price declined all the way from March and fell to HK $250 / share at the end of October, which is the lowest share price of Tencent in recent two years.

In the past two years, Tencent's performance in the capital market has completed a cycle, and at the same time, it has experienced a nirvana in its business field. After a series of changes, such as the suspension of game plate, recovery, adjustment of organizational structure and B end business, Tencent has become more mature.

According to Tencent's earnings report in May 13th, it achieved revenue in the first quarter of this year. One thousand and eighty point six five Billion yuan, an increase of 26% over the same period; net profit is Two hundred and eighty-eight point nine six Billion yuan, an increase of 6% over the previous year. Two hundred and seventy point seven nine Billion yuan, an increase of 29% over the same period last year.

A brokerage analyst told the economic news reporters twenty-first Century, compared with two years ago, today's Tencent revenue structure is more diversified, which also makes it have a stronger ability to resist risks. Otherwise, it is too dependent on the game business before, and once this kind of irresistible risk occurs, the overall financial data will also be greatly affected.

In the first quarter of the outbreak of the new crown pneumonia epidemic, although Tencent's game, To B and other business needs grew, but like offline payment business has been a big impact. In a relatively diversified revenue system, businesses can make up for each other to offset some of the impact of the external environment.

Game warming

In the whole 2019, Tencent's game business was actually recovering from the trough, and the growth rate in the four quarter was -1%, 8%, 11% and 25% respectively. Judging from the performance of the first quarter of this year, the growth rate of Tencent Games has returned to the state of 2017.

According to the earnings report, Tencent's online game business achieved revenue in the first quarter. Three hundred and seventy-two point nine eight Billion yuan, an increase of 31% over the previous year, accounting for the proportion of Tencent's total revenue. 34.5% 。 The increase was mainly driven by the contribution of domestic hand travel (including the "elite of peace" and "the glory of kings") and the increase in the contribution of overseas games (including PUBG MOBILE and Clash of Clans).

There are many reasons behind the rebound in game business, and the epidemic is one of them. Affected by the epidemic, the vast majority of people in the world are forced into social isolation, which also generates a lot of online entertainment needs. In the domestic market, statistics show that in the first quarter, the mobile game market revenue nearly 55 billion yuan, a record high, an increase of more than 49% over the same period.

So not only Tencent, but also the quarterly revenue of other domestic game manufacturers. For example, 37 mutual entertainment, first quarter revenue Forty-three point four three Billion yuan, an increase year on year 33.76% And the perfect world's first quarter revenue. Twenty-one point zero eight Billion yuan, an increase year on year 47.69% The net amount of operating cash flow is Five point seven one Billion yuan, an increase of up to 426.42% 。

The same is true in overseas markets. According to Sensor Tower data, Tencent's "PUBG MOBILE" earned more than US $91 million overseas in March this year. 66.8% Year-on-year growth 33.6% A record high.

In fact, since last year, Tencent has been emphasizing the importance of overseas games market. One of the most important ways is to invest in mergers and acquisitions. In October last year, Tencent announced that it would increase its holdings of Supercell shares to holdings. In January of this year, Tencent also issued a cash offer to Norway game developer Funcom NV.

According to Guoxin Securities Analysis, overseas mergers and acquisitions bring a lot of high-quality assets to Tencent, and a better product system helps Tencent better and faster to adapt to the diversified global market.

Up to now, many of Tencent's products are doing well overseas. In addition to the above mentioned "PUBG MOBILE", there are also "call of duty" hand tours, Supercell's "wilderness", and Riot Games's "cloud top game" hand tour. In April of this year, Tencent also launched a card hand tour "Rune legend of the earth" and began testing the new game "Valorant".

However, the epidemic will eventually pass away. In the earnings report of Tencent, it is also mentioned that in the future, with the resumption of work in various places, it is expected that the usage time and consumption activities of game users will generally return to normal level. But Tencent also believes that the game industry has expanded its long-term audience and attractiveness from its structure. This is a long-term good for the future development of the game industry.

AB surface of the epidemic

According to a quarterly report of Tencent, the number of combined monthly active accounts of WeChat and WeChat has reached. Twelve point zero two Billion, year-on-year growth 8.2% Ring growth 3.2% The number of active accounts of QQ mobile terminals is Six point nine three 100 million, a year-on-year decline of 1%, the growth rate of the chain. 7.2% 。

WeChat, which already has such a huge volume, can achieve a 8% growth rate. As well as a continuous multiple quarters, the number of users' double down 'QQ has increased monthly, which is also benefited from the epidemic. According to the financial report, WeChat and QQ allow users to keep in touch with their relatives and friends during the home ownership order. This drives both the total number of messages and the usage time of each day to gain double-digit year-on-year growth.

Moreover, with the transfer of user behavior from offline to online structural changes, WeChat has further integrated into daily life services through small procedures, especially in the purchase of daily necessities and livelihood services. The data disclosed in the financial report show that the number of daily active accounts of the small program has exceeded 400 million.

The brokerage analyst told reporters that the special situation of the epidemic has spawned the growth of small procedures, which is conducive to the future penetration of Tencent into more industries.

WeChat official data showed that as of February 14th, the number of small program supermarket business visits increased by 115% over the same period, while the number of fresh fruit and vegetable formats increased by 168% compared to the same period last year, and the electricity business format of the community grew by 83% over the same period last year. According to Aladdin index, Top 100 small programs involve 16 industries, and the application scenarios are very diverse.

In the first quarter, Tencent's online advertising revenue was One hundred and seventy-seven point one three Billion yuan, an increase of 32% over the same period, a decline of the ring ratio. 12.4% 。 Among them, social and other advertising revenue increased 47% to One hundred and forty-five point nine two Billion yuan.

Tencent said that the year-on-year growth of advertising business was due to the isolation of the epidemic, the increase in the usage of consumers in the main applications, and the efficiency of advertising offered by Tencent to advertisers. The decline is due to the traditional low season of the promotion campaign in the first quarter.

According to the earnings report, advertising expenditure in games, Internet services and online education industry has increased, because consumption of these services has increased during the epidemic period, while ad spending on fast moving consumer goods, automobiles and tourism has declined.

Looking ahead, Tencent believes that the advertising industry may face multiple resistance, including the fact that consumers' Internet usage has returned to normal level, resulting in an increase in advertising exposure. As well as the impact of local market epidemics, multinational brands have sharply reduced their global promotion budget.

Revenue in the last quarter almost exceeded the game's financial technology and business services business, revenue in the first quarter of this year. Two hundred and sixty-four point seven five Billion yuan, an increase of 22% over the previous year, accounting for 24% of total revenue, and a widening gap with gaming business.

According to the financial report, the income of financial and technological services declined, mainly due to the Spring Festival and the user's home segregation, which reduced the activities and withdrawals of offline transactions. However, Tencent said that in the last week of April, the average daily business volume of Tencent has been restored to the end of 2019.

In addition, affected by the epidemic, the project delivery of Tencent cloud services and the acquisition of new customers have also been delayed, resulting in a decline in cloud service revenue. But because of the epidemic, Tencent cloud has gained more market opportunities in the video, education and retail industries.

For example, the Tencent conference has been on the line for two months, and the number of users has exceeded 10 million, making it the most popular video conference product in China. At the same time, Tencent also launched the international version of Tencent conference "VooV Meeting", which has been launched online in more than 100 countries and regions worldwide.

Last quarter, Tencent's "pillar" almost changed hands, but this time, the revenue of gaming business increased further. But this is a short-term consequence of the epidemic and does not really reflect the Tencent under normal circumstances.

Soochow securities analysts believe that financial technology and enterprise services will become the main driving force for Tencent's revenue growth. For Tencent, it is also natural to remove the hat of the "game company", and the diversified revenue structure is also healthier. Especially in the face of changes in the force majeure environment, diversification can show stronger resilience.

(Editor: Zhang Xing)