CICC Morning Notes 20081107

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!

China International Capital Corporation Limited

Sales & Trading Department