Citi released a research report stating that TENCENT (00700) recently held an investor meeting in Macau, focusing on the group's video content and intellectual property strategy. Management pointed out that the profitability of TENCENT Video will stabilize and improve in 2024, with future targets continuing to maintain profitability while promoting membership growth through adjusted channel collaborations. The "Buy" rating for TENCENT is reiterated, and it is listed as a preferred stock and a core Hold Positions, with a Target Price of 573 Hong Kong dollars.
The report cites management noting that TENCENT Video launched 9 highly rated series in 2024. Following strategic restructuring and cost optimization, TENCENT Video increased the success rate of dramas over the past two years. In 2025, the focus will continue to be on producing high-quality content, reducing the number of series, and reallocating resources to more impactful S+ content.
Management also pointed out that in the future, through adjustments in channel cooperation and promoting memberships growth, converting monthly subscribers to quarterly or annual automatic renewal memberships, the number of SVIP memberships and overall ARPU will increase over time. Additionally, in terms of Short Video, the group will continue to allocate resources to the production of horizontal short dramas and will try to collaborate with third-party content providers to meet the needs of free users.
