Tencent 0700 04 (Oct 21 - Dec 25)

[winston]

not vested

Tencent Holdings (700 HK)
Recommendation : BUY
Fair Value : HKD 640.00

RIDING ON AI ADOPTION AND MONETISATION

• Beat on both revenue and earnings with accelerated growth across key business segments

• Solid deferred revenue growth

• Accelerating artificial intelligence (AI) integration and Cloud


Tencent delivered a strong set of 4Q24 results with revenue beating consensus estimates by 2%, having increased 11% year-on-year (YoY), attributable to accelerated growth across key business segments.

Management laid out a clear strategy and roadmap in accelerating AI integration which we believe should address many key issues.

Tencent remains a core holding in the internet and platform industry and should benefit from the acceleration and broadening of AI adoption, and a recovery of domestic consumption.

Tencent’s overall business fundamentals is improving with sustainable growth in games and online ads.

Tencent’s Weixin ecosystem, and solid domestic and global gaming business offers vast monetisation opportunities.

The company has been stepping up in AI-related CAPEX with a CAPEX guidance of around low-teens percentage of revenue in 2025, and still focuses on shareholder’s returns.

2024 buybacks amounted to HKD112b, higher than the target of HKD100b.

Management guided 2025’s buyback target to be more than HKD80b.

Catalysts to watch out for includes:
i) any updated and new AI models to be released in the future. For instance, an upgraded Hunyuan T1 model will be released later this week;
ii) any new and upgraded features being integrated into Weixin and/or Yuanbao.

The stock is trading at 18x forward price-to-earnings (P/E), which is close to its historical average level of 19x forward P/E.

We revise up earnings estimates by 7% this year and lift our fair value estimate to HKD640.00 based on sum of the parts (SOTP) methodology and implies 20x forward P/E.

Source: OCBC

[winston]

not vested

<Research>CICC: TENCENT (00700.HK) Balances Shareholder Return with AI Investment; TP $600

TENCENT (00700.HK) 's 4Q24 game revenue increased rapidly, with 4Q24 revenue hiking by 20% to RMB 49.2 billion, beating CICC's expectation, CICC released a research report saying.

Of which, overseas game revenue grew by 15% YoY, while “PUBG M”, Supercell's “Brawl Stars” and other games performed strongly.

Domestic game revenue rose by 23% YoY, driven by games such as "Game for Peace” and “DNF Mobile”.

In the face of long-term AI opportunities, the Company is striving to balance AI capital expenditure with immediate shareholder returns to maximize long-term shareholder returns, with the Company's actual dividend in 2024 to be $32 billion and the completion of a $112 billion buyback in 2024.

Based on TENCENT's revenue growth in advertising and cloud computing, CICC previously raised its 2025/2026 revenue forecasts by 1%/ 2% to RMB717.2 billion/ RMB757.6 billion each, and maintained its 2025/2026 non-IFRS net profit forecasts unchanged, with rating kept at Outperform.

Due to the upward shift in market valuation, the broker has raised its target price by 8.5% to $600, corresponding to projected 2025 non-IFRS PE ratio of 20.6x.

Related News: UBS Expects TENCENT (00700.HK) 1Q Rev. to Rise 10% YoY, Biz to Stay Resilient

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

not vested

Tencent sees AI gains, first-quarter profit up 14pc to 47.8b yuan

Net profit for the first quarter expanded 14 percent year-on-year to 47.8 billion yuan (HK$51.73 billion),

Revenues grew 13 percent to 180 billion yuan from one year ago,

Net profit on the non-IFRS basis, however, missed Goldman Sachs’ 49.55 billion yuan projection.

Source: The Standard

https://www.thestandard.com.hk/market/article/302458/

[winston]

1Q25: Strong Results Propelled By Robust Games And AI-Powered Ad-Tech Tencent’s

1Q25 results came in higher than expectations.

Revenue grew 13% yoy to Rmb180b, 3% ahead of our and consensus estimates.

Gross margin expanded 3ppt yoy to 55.8%, outpacing consensus forecasts.

Non-IFRS operating profit grew 18% yoy to Rmb69.3b, while non-IFRS operating margins expanded 2ppt yoy to 38.5% on a positive shift in revenue mix.

Non-IFRS diluted EPS surged 25% yoy, 3% higher than our and consensus estimates.

Maintain BUY with a higher target price of HK$650.00.

Source: CGS

https://research.uobkayhian.com/content ... e=hs_email

[winston]

vested

Tencent Holdings (700 HK)

Recommendation : BUY
Fair Value : HKD 650.0

GROWTH ACCELERATION
• Another quarter of solid beat
• Ramping artificial intelligence (AI) services
• A core holding riding on AI adoption and monetisation

Tencent reported a stronger-than-expected 1Q25 results as revenue and adjusted net profit rose 13% year-on-year (YoY) and 22% respectively, beating consensus estimates by 3-4%.

Revenue acceleration was seen in gaming and online ads, demonstrating strong execution and early AI monetisation.

Games revenue further accelerated to +24% YoY, thanks to +24% YoY growth in domestic games and +23% YoY growth in international games.

Online ad revenue accelerated to +20% YoY, driven by ongoing AI upgrades and strong advertising demand for Video Accounts, Mini Programs and Weixin Search.

Fintech and business services (FBS) revenue further recovered to +5% YoY. Ongoing operating leverage supported further margin expansion as gross profit margin and adjusted operating margin edged up further to 55.8% and 38.5% respectively.

Tencent is committed to AI investment and has seen early signs of monetisation with improving ad revenues and games engagement through AI.

Management expects there will be two opportunities in agentic AI - .

First, general agentic AI products like Yuanbao, which is a consumer-facing application, and IMA, which add functionalities to handle more complicated tasks, will evolve over time.

Second, agentic AI within Weixin which is unique as it connects with Weixin ecosystem and access transactional and operating capabilities across apps.

In addition, AI services have been rolling out within Weixin by:
i) integrating Yuanbao as Weixin contact last month and providing users with seamless AI interaction within Weixin Chat;
ii) powering Weixin Search with fast thinking models e.g. Hun Yuan Turbo S and DeepSeek R1;
iii) providing AI tools for content in Official Accounts and Video Accounts; and
iv) offering AI coding assistant to reduce Mini Programs development time.

Looking ahead, we believe the robust momentum should be sustainable. Management guided that a long runway for growth in games and ad business.

Management expects a mid- to high-teens growth in ad revenue would be sustainable over an extended period.

Tencent’s Weixin ecosystem, and solid domestic and global gaming business offers vast monetisation opportunities.

The stock is trading at 16x forward price-to-earnings (P/E), which is at around -0.5s.d. to its historical average level of 19x forward P/E. We finetune our fair value estimate to HKD650.00 based on sum of the parts (SOTP) methodology and implies 20x forward P/E.

Source: OCBC