Tencent's performance is expected to bottom out and rebound in the second half of the year

Soochow Securities: we expect Tencent to achieve a revenue of 133 billion yuan in Q2 2022, a YOY decrease of about 3.8%, and an adjusted net profit of 25 billion yuan, a YOY decrease of 26.6%.

The performance of the game supply and demand side was flat, and the revenue of social networks increased slightly YOY:

1) Tencent did not launch new games in Q2 2022, and the repeated epidemic in many parts of the country and the downward macro environment led to the decline of users' willingness to consume games, and the short-term performance of games was under pressure. The YOY growth rate of overseas game market has declined. Therefore, we estimate that the local revenue is 31.5 billion yuan, the overseas revenue is 11 billion yuan, and the total revenue of Q2 2022 game business is 42.5 billion yuan, a YOY decrease of about 1%.

2) High quality dramas have driven the growth of paying users. We predict that the social network revenue in Q2 2022 will be 29.5 billion yuan, with a YOY increase of about 1.8%; As the drama comprehensive resource reserve continues to be broadcast in the second half of the year, the income of social networks will continue to increase.