Largan (3008 TT) (Underperform)9 Oct rev -6% MoM, -7% YoYAllen Chang Largan Oct revenues were down 6% MoM, or down 7% YoY. This is the first time that Oct rev was negative MoM since 2012 (Fig 1).The soft Oct revenues echo our view of market share in China smartphones being under pressure, and we expect fiercer competition to come.Street expects EPS growth of +20% / +16% YoY in 2019-20E vs. our estimates of -2% / -4% YoY in 2019-20E. We believe expectations are too high.Venezuela – Down, But Not Out10 AirTAC (1590 TT) (Outperform)11 Alibaba Group Holding (BABA US) (Outperform)12 AUO (2409 TT) (Neutral)13 China Int'l Travel Service (A-Share) (601888 CH) (Outperform)14 China Property Sector15 Hiwin Technologies (2049 TT) (Outperform)16 Marketing feedback17 Skyworth (751 HK) (Downgrade to Neutral)18 Smartphone tracker v.1519 MegaChips (6875 JP) (Outperform)20 Subaru (7270 JP) (Neutral)21 TDK (6762 JP) (Downgrade to Neutral)22 Kumho Petrochemical (011780 KS) (Outperform)23 Indonesia Strategy24 Indonesia Tobacco25 Krung Thai Bank (KTB TB) (Downgrade to Underperform)26 MacVisit: Globetronics Technology Bhd27 MacVisit: Ranhill Holdings Berhad28 MISC (MISC MK) (Outperform)29 2Axis Bank (AXSB IN) (Downgrade to Neutral)30 Cipla (Outperform)31 Minda Industries Ltd (MNDA IN) (Outperform)32 NTPC (NTPC IN) (Outperform)33 State Bank of India (SBIN IN) (Neutral)34 3 Please refer to page 8 for important disclosures and analyst certification, or on our websitemacquarie/research/disclosures.5 November 2018 Hong Kong EQUITIES700 HK OutperformPrice (at 13:01, 05 Nov 2018 GMT) HK$292.40Valuation HK$520.00 - Sum of Parts12-month target HK$520.00Upside/Downside %+77.812-month TSR %+78.3Volatility Index Low/MediumGICS sector Media &EntertainmentMarket cap HK$bn2,784Market cap US$m369,617Free float %6030-day avg turnover US$m1,093.9Number shares on issue m9,522Investment fundamentalsYear end 31 Dec2017A 2018E 2019E 2020ERevenue bn 237.8 315.5 439.1 571.1EBIT bn 90.3 94.6 120.3 150.8EBIT growth % 60.9 4.7 27.2 25.3Reported profit bn 71.5 75.9 96.0 120.9Adjusted profit bn 65.1 77.3 102.1 128.7EPS adj Rmb 6.83 8.08 10.63 13.34EPS adj growth % 42.7 18.2 31.6 25.5PER adj x 37.7 31.9 24.2 19.3ROE % 28.1 24.8 26.1 26.2Net debt/equity % 3.5 -12.0 -28.0 -41.5P/BV x 8.9 7.1 5.7 4.5700 HK rel HSI performance, & rec history Note: Recommendation timeline - if not a continuous line, then there was noMacquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, November 2018(all figures in Rmb unless noted, TP in HKD)Analysts Macquarie Capital Limited Wendy Huang, CFA+852 3922 3378wendy.huang@macquarieMarcus Yang +86 21 2412 9087marcus.yang@macquarieJohn Wang +852 3922 3578john.wang@macquarieFrank Chen +852 3922 1433frank.chen@macquarieEllie Jiang +852 3922 4110ellie.jiang@macquarieTencent (700 HK)Get ready for the Industrial Internet eraKey points We expect 3Q18 adj. earnings to beat consensus by 3%. Mobile gamesales could grow by 13% QoQ on frequent MMO launches. We cut 18E adj. EPS 4%; less than 1% changes in 19E/20E EPS. We lowerour SOTP-based TP to HK$520 (from HK$532 prior. Over 1,000 mini games have been launched on miniprogram, with in-gamepurchase and advertising to be future revenue models.Event After its third-largest-ever company restructure recently, Tencent shared itsvision and solutions for the industrial internet at its 2018 Global PartnerConference in Nanjing last week. It announced its cloud plan “Yun Qi” tobetter serve various industries. On the consumer internet front, it alsounveiled a new short video product Yoo in light of competition from Tiktok.Also notably, the per-user daily average number of miniprograms used hasexceeded 20, with daily transactions increasing 142% vs six months ago. Impact Leverage 2C internet knowledge to develop 2B internet. At the Tencent2018 Global Partner Conference in Nanjing last week, Tencent shared itsvision for integrating the consumer internet and business internet to betterserve various traditional industries. Tencent will focus on smart retail, smarthealthcare, smart education, smart transportation, smart manufacturing andsmart city management. Tencent will apply its 20-year experience inconsumer internet to provide unique C2B (consumer to business) productsand solutions for industries. Cloud, which has been growing at triple digits inthe past year, will be essential in this transformation.Expect 3Q18 earnings 3% above consensus.Tencent will report 3Q18results on 14 November post HK market close. We expect 3Q18 revenue togrow 24% YoY, 9% QoQ to RMB81bn, in line with consensus (Fig 1). Weestimate GPM to decline to 44.1% in 3Q18 from 48.6% in 3Q17, due to slowergrowth in high-margin business such as game and interest income. We expectadjusted net profit to grow 14% YoY to RMB19.4bn, 3% ahead of cons. Frequent roll-outs to drive mobile game sequential growth of 13% in 3Qand 20% in 4Q18. Tencent released eight mobile titles during 3Q18. Most ofthem are relatively high-ARPU MMO genre, such as MT4 and King of Kings3D. HoK on the other hand, also saw DAU/time spent increase by 5%/13%sequentially partly thanks to the launch of survival mode in end May. Weanticipate strong momentum to continue in 4Q18 with full quarter revenuecontribution from newly launched titles, additional titles such as Red AlertOL, and less drag from deferred revenue. Earnings and target price revision We cut 18E adj. EPS 4%; <1% changes in 19E/20E EPS. We lower ourSOTP-based TP to HK$520 (from HK$532 prior).Price catalyst 12-month price target: HK$520.00 based on a Sum of Parts methodology. Catalyst: 3Q18 results on 14 Nov, game approval regulation.Action and recommendation Buy on dip. Reiterate Outperform. 4 。。。。。。