Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (00700.HK) [1] Core Insights - Tencent's 1Q25 financial results exceeded expectations, with total revenue reaching 180 billion CNY, a year-over-year increase of 13%, surpassing Bloomberg's consensus by 3% [1][8] - The NON-IFRS net profit attributable to shareholders was 61.3 billion CNY, reflecting a year-over-year growth of 22%, also exceeding Bloomberg's consensus by 3% [1][8] - The target price range is set between 545.69 and 606.33 HKD, with the current price at 508.00 HKD [1] Revenue Breakdown - The revenue structure for 1Q25 is as follows: - Gaming: 59.5 billion CNY (33% of total revenue), YOY +24% - Financial Technology and Enterprise Services: 54.9 billion CNY (31% of total revenue), YOY +5% - Social Networks: 32.6 billion CNY (18% of total revenue), YOY +7% - Marketing Services: 31.9 billion CNY (18% of total revenue), YOY +20% [15][26] Business Performance - The gaming segment continues to show strong performance, with both domestic and international markets exceeding expectations. Domestic gaming revenue was 42.9 billion CNY, YOY +24%, while international gaming revenue was 16.6 billion CNY, YOY +23% [20][18] - The social network segment's revenue growth was driven by mobile games, TME membership growth, and mini-game revenue sharing [26] - Marketing services revenue exceeded expectations due to increased user engagement and AI-driven advertising solutions, reaching 31.9 billion CNY, YOY +20% [30] Financial Projections - Revenue forecasts for 2025-2027 have been slightly adjusted to 728.6 billion CNY, 784.5 billion CNY, and 835.6 billion CNY respectively, with year-over-year growth rates of 10%, 8%, and 7% [5] - The NON-IFRS net profit projections for the same period are 256.0 billion CNY, 288.6 billion CNY, and 313.1 billion CNY, with year-over-year growth rates of 15%, 13%, and 9% [5] Capital Expenditure - Capital expenditure (CAPEX) for the quarter reached 23.0 billion CNY, a year-over-year increase of 60%, representing 13% of total revenue [32]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (00700.HK) [1] Core Views - Tencent's 1Q25 financial results exceeded expectations, with total revenue reaching 180 billion CNY, a year-over-year increase of 13%, surpassing Bloomberg's consensus by 3% [1][8] - The NON-IFRS net profit attributable to shareholders was 61.3 billion CNY, up 22% year-over-year, also exceeding Bloomberg's consensus by 3% [1][8] - The target price range is set between 545.69 and 606.33 HKD, with the current price at 508.00 HKD [1] Financial Performance Summary - Total revenue for 1Q25 was 1800 billion CNY, with a year-over-year growth of 13% [1][8] - NON-IFRS net profit for the same period was 613 billion CNY, reflecting a year-over-year increase of 22% [1][8] - The company achieved a capital expenditure (CAPEX) of 23 billion CNY, a significant year-over-year increase of 60%, representing 13% of total revenue [1][30] Business Segment Performance - **Gaming**: Revenue from the gaming segment reached 595 billion CNY, with a year-over-year growth of 24%, marking the highest growth rate in five quarters [1][18] - **Social Networks**: Revenue from social networks was 326 billion CNY, with a year-over-year increase of 7% [1][26] - **Marketing Services**: This segment generated 319 billion CNY in revenue, reflecting a year-over-year growth of 20% [1][30] - **Financial Technology and Enterprise Services**: Revenue was 549 billion CNY, with a year-over-year growth of 5% [1][32] Future Outlook - The report projects a revenue forecast for 2025-2027 of 7286 billion CNY, 7845 billion CNY, and 8356 billion CNY respectively, with year-over-year growth rates of 10%, 8%, and 7% [5] - The NON-IFRS net profit forecast for the same period is adjusted to 2560 billion CNY, 2886 billion CNY, and 3131 billion CNY, with year-over-year growth rates of 15%, 13%, and 9% [5] Valuation Metrics - The report estimates the EPS for 2025-2027 to be 28.00 CNY, 31.85 CNY, and 34.87 CNY respectively, with corresponding target PE ratios of 18-20x for 2025 [5]

Investment Rating - The investment rating for Tencent Holdings is "Buy" (maintained) [1] Core Views - Tencent's Q1 revenue reached 1800.2 billion CNY, representing a year-over-year increase of 12.9% and a quarter-over-quarter increase of 4.4%, exceeding consensus expectations of 1756.0 billion CNY [4] - The company's gross profit for Q1 was 1004.9 billion CNY, up 19.8% year-over-year and 10.9% quarter-over-quarter, also surpassing the consensus estimate of 947.7 billion CNY [4] - Adjusted net profit for Q1 was 613.3 billion CNY, reflecting a year-over-year growth of 22.0% and a quarter-over-quarter increase of 10.9%, exceeding the consensus forecast of 596.8 billion CNY [4] Summary by Sections Q1 Performance - Tencent's Q1 revenue was 1800.2 billion CNY, with a gross profit of 1004.9 billion CNY and adjusted net profit of 613.3 billion CNY, all beating market expectations [4] Value-Added Services (VAS) - Domestic game revenue in Q1 was 429 billion CNY, up 24% year-over-year, driven by seasonal peaks in popular games like "Honor of Kings" and "Crossfire Mobile" [5] - International game revenue reached 166 billion CNY, a 22% year-over-year increase, supported by titles such as "Brawl Stars" and "PUBG MOBILE" [5] Marketing Business - Marketing revenue for Q1 was 319 billion CNY, a 20% year-over-year increase, driven by strong demand for advertising on platforms like WeChat and video accounts [6] - The combined monthly active users (MAU) for WeChat and WeChat reached 1.402 billion, a 3% year-over-year increase [6] Financial Technology - Financial technology revenue was 549 billion CNY, a 5% year-over-year increase, with gross margin improving to 50% [7] AI Investments - Tencent's capital expenditure in Q1 was 274.8 billion CNY, a 91% year-over-year increase, reflecting ongoing investments in AI across various business lines [8] Profit Forecast - The projected net profits for Tencent for 2025, 2026, and 2027 are 2560.2 billion CNY, 2973.9 billion CNY, and 3384.8 billion CNY respectively, with a stable pipeline of new games and AI integration across business lines [10]

Core Insights - The company reported Q1 2025 revenue of 1800.2 billion RMB, exceeding the forecast of 1756 billion RMB, with a year-on-year growth of 13% and a quarter-on-quarter growth of 4% [1] - Net profit for Q1 2025 was 478.2 billion RMB, slightly below the forecast of 516.9 billion RMB, with a year-on-year increase of 14% [1] - Adjusted net profit reached 613.3 billion RMB, surpassing the expected 596.8 billion RMB, reflecting a year-on-year growth of 22% [1] Gaming Sector - The domestic gaming sector experienced rapid growth, with value-added service revenue reaching 921.33 billion RMB, a year-on-year increase of 17% [1] - Local market game revenue grew by 24%, driven by record-high revenue from evergreen games like "Honor of Kings" and "Peacekeeper Elite" [1] - International game revenue increased by 23%, attributed to revenue growth from games such as "Brawl Stars" and "Clash of Clans" [1] Advertising Revenue - Marketing services (advertising) revenue was 318.53 billion RMB, a year-on-year increase of 20%, exceeding market expectations [2] - The growth was primarily driven by strong demand for advertising inventory from video accounts, mini-programs, and WeChat search [2] - The company’s financial technology and enterprise services revenue was 549.07 billion RMB, reflecting a year-on-year growth of 5% [2] Profitability and Capital Expenditure - The overall gross margin improved to 56%, up approximately 3 percentage points year-on-year, due to the growth of high-margin businesses [2] - Capital expenditure for Q1 was 275 billion RMB, accounting for about 15.3% of revenue, aimed at supporting AI-related business development [2] - The company indicated that AI capabilities have made substantial contributions to performance advertising and evergreen games [2] AI Integration and Future Prospects - The integration of DeepSeek is expected to enhance the company's competitive edge in the internet traffic domain, with WeChat's daily search volume nearing 600 million [3] - The shift towards AI search and AI agents is anticipated to transform the internet landscape, positioning the company favorably for future growth [3] - The upcoming AI interactive game "Whispers from the Star" showcases the potential for AI to enhance user engagement and game dynamics [4] Profit Forecast - The company projects net profit attributable to equity holders to reach 2235 billion RMB, 2542 billion RMB, and 2882 billion RMB for 2025-2027, with year-on-year growth rates of 15.2%, 13.7%, and 13.4% respectively [4] - The expected earnings per share (EPS) for the same period are 24.3 RMB, 27.7 RMB, and 31.4 RMB, corresponding to price-to-earnings (P/E) ratios of 20, 18, and 15 [4]

Core Viewpoint - The company reported a strong performance in Q1 2025, with total revenue increasing by 13% year-on-year to 180 billion RMB, surpassing market expectations [1][2]. Revenue Breakdown - Gaming revenue grew by 24% year-on-year, driven by a low base from the previous year and the success of several long-standing games, as well as new titles like "MDnF" and "Delta Operation" [1]. - Social revenue increased by 7%, supported by growth in music subscriptions, mini-game service fees, and mobile game in-app purchases [1]. - Marketing revenue accelerated by 20%, primarily due to strong demand for advertising on platforms like Video Accounts (up 60%+) and improved performance in search queries and mini-programs [1][2]. Profitability Metrics - Gross profit rose by 20% year-on-year, outpacing revenue growth, with gross margin improving by approximately 3 percentage points [1]. - Adjusted net profit reached 61.3 billion RMB, a 22% increase year-on-year, benefiting from high-margin businesses and cost optimization in payment and cloud services [1]. Capital Expenditure and Investments - Capital expenditures amounted to 27.5 billion RMB, a 91% increase year-on-year, reflecting ongoing investments in AI and cloud service infrastructure [2]. - Some of these investments have already started to contribute to revenue, enhancing user engagement and activity in long-standing games [2]. Future Outlook and Valuation - The company expects Q2 total revenue to grow by 10% to 177.8 billion RMB, with a full-year revenue forecast of 723.5 billion RMB, representing a 9.6% increase [3]. - New game releases are anticipated to alleviate concerns regarding high revenue bases in the latter half of the year [3]. - The current price corresponds to a 17x P/E ratio for 2025, with a target price adjustment to 604 HKD based on stable performance and shareholder returns [3].

Core Viewpoint - The company reported strong Q1 2025 performance with revenues of 180 billion yuan, exceeding Bloomberg's consensus estimate by 2.45% [1][2]. Group 1: Financial Performance - Q1 2025 revenue reached 180 billion yuan, showing a year-over-year (YoY) increase of 13% and a quarter-over-quarter (QoQ) increase of 4%, surpassing the consensus estimate of 175.7 billion yuan [1]. - Non-GAAP net profit attributable to shareholders for Q1 2025 was 61.3 billion yuan, reflecting a YoY growth of 22% and a QoQ growth of 11%, exceeding the consensus estimate of 59.7 billion yuan by 2.7% [1]. - The gaming business generated 59.5 billion yuan in revenue for Q1 2025, with a YoY increase of 24% and a QoQ increase of 21%, outperforming the consensus estimate of 55.3 billion yuan by 7.7% [1]. Group 2: Segment Performance - Domestic game revenue grew by 24% YoY, reaching 42.9 billion yuan, exceeding the consensus estimate of 40.3 billion yuan by 6.5% [1]. - Overseas game revenue also showed strong performance with a YoY increase of 22%, totaling 16.6 billion yuan, surpassing the consensus estimate of 15.4 billion yuan by 7.9% [1]. - Social network revenue for Q1 2025 was 32.6 billion yuan, reflecting a YoY increase of 7% and a QoQ increase of 9%, slightly above the consensus estimate of 32.2 billion yuan [2]. Group 3: Future Outlook - The company plans to continue investing in AI, which has significantly contributed to the growth of performance advertising and evergreen games [2]. - Revenue projections for 2025 and 2026 are estimated at 734.2 billion yuan and 790 billion yuan, representing YoY growth of 11.2% and 7.6% respectively [2]. - Adjusted net profit forecasts for 2025 and 2026 are 258 billion yuan and 286.2 billion yuan, indicating YoY growth of 15.8% and 10.9% respectively [2].

Core Viewpoint - Tencent's Q1 2025 financial results exceeded expectations, with significant growth in gaming and advertising revenues, and a strong performance in financial technology and enterprise services [1][2][3] Group 1: Financial Performance - Tencent achieved operating revenue of 180 billion yuan in Q1 2025, a year-on-year increase of 13%, surpassing Bloomberg's consensus estimate by 3% [1] - Adjusted net profit attributable to shareholders reached 61.3 billion yuan, reflecting a 22% year-on-year growth, also exceeding Bloomberg's expectations by 3% [1] - The company has repurchased 21 billion HKD worth of shares as of May 14, 2025, with a commitment to repurchase no less than 80 billion HKD for the year [1] Group 2: Gaming Sector - Q1 2025 saw record highs in both domestic and international gaming revenues, with a 17% year-on-year increase in value-added services revenue [1] - Domestic game revenue reached over 40 billion yuan for the first time in a single quarter, with notable performances from long-standing titles such as "Honor of Kings" and "Crossfire Mobile" [1] - New game releases, including "Delta Force" and "Operation Delta," contributed to growth, with "Operation Delta" achieving over 12 million daily active users in April [1] Group 3: Advertising Revenue - Advertising revenue grew by 20% year-on-year in Q1 2025, with video accounts and search services driving this growth [2] - The advertising platform's AI capabilities, including image generation and digital human live streaming, are beginning to show positive effects [2] - Video account advertising revenue has seen over 60% year-on-year growth for three consecutive quarters, indicating strong performance [2] Group 4: Financial Technology and Enterprise Services - Financial technology and enterprise services revenue grew by 5% year-on-year, meeting expectations, with financial technology showing low single-digit growth [2] - The gross margin for financial technology and enterprise services reached a historical high of 50.3%, driven by improvements in payment and cloud business profitability [2] - AI-related revenue in the cloud business is growing rapidly, contributing to the overall performance of the financial technology and enterprise services segment [2] Group 5: Strategic Investments in AI - Tencent's capital expenditure for Q1 2025 was 27.5 billion yuan, nearly doubling year-on-year, representing 15% of revenue [3] - Research and development expenses increased by 21% year-on-year to 18.9 billion yuan, reflecting ongoing investments in AI [3] - The company continues to enhance AI functionalities within WeChat, aiming for further improvements in user experience and service capabilities [3] Group 6: Future Outlook - The adjusted net profit forecasts for Tencent for 2025-2027 have been raised to 252.8 billion, 283.7 billion, and 311.4 billion yuan respectively [3] - The target price based on the SOTP valuation method is set at 694 HKD, indicating a potential upside of 33% [3]

Core Insights - Tencent's revenue for Q1 2025 reached 180 billion RMB, marking a 13% year-on-year growth, primarily driven by advertising and gaming sectors [1] - Adjusted operating profit for Q1 2025 was 69.3 billion RMB, reflecting an 18% year-on-year increase, while Non-IFRS net profit rose by 22% to 61.3 billion RMB [1] - The company is optimistic about the potential of AI applications, which have already made significant contributions to existing businesses and new initiatives [2] Revenue Performance - Advertising and gaming businesses showed strong performance, with overall revenue growth of 13% year-on-year and adjusted profit growth of 22% [1] - Online gaming revenue increased by 24% year-on-year, with domestic gaming revenue also up by 24% to 42.9 billion RMB [3] - The company's online gaming revenue for Q1 2025 was 59.5 billion RMB, a 23.7% increase year-on-year [2] Business Segments - The gaming segment benefited from the success of evergreen games like "Honor of Kings" and "Crossfire Mobile," which achieved record-high revenues [3] - The marketing services segment saw a 20% year-on-year increase in online advertising revenue, reaching 31.9 billion RMB, driven by traffic growth and enhanced AI models [3] - Financial technology and enterprise services revenue grew by 5% year-on-year to 54.9 billion RMB, with a recovery in growth rates observed [4] Future Outlook - The company is expected to maintain robust performance, with long-term growth potential in areas like WeChat e-commerce and AI applications not fully reflected in current profit forecasts [4] - Projected adjusted net profits for 2025-2027 are estimated at 252.5 billion RMB, 283.2 billion RMB, and 312.9 billion RMB respectively [4]

Group 1 - The core viewpoint highlights that the company has exceeded revenue and profit expectations, with a focus on upgrading its e-commerce department and leveraging AI for effective advertising and sustainable gaming growth [1] - The company maintains an "overweight" rating, projecting that AI will reshape platform value, particularly through its social media channels, enhancing advertising revenue [1] - Revenue estimates for 2025 have been slightly adjusted upwards to 725.3 billion, 787.9 billion, and 861.1 billion yuan, with Non-IFRS net profit estimates revised to 249.0 billion, 274.6 billion, and 312.3 billion yuan [1] Group 2 - In Q1 2025, the company achieved revenue of 180 billion yuan, a year-on-year increase of 12.9%, surpassing market expectations, with adjusted net profit reaching 61.3 billion yuan, up 22.0% year-on-year [1] - The gross margin for Q1 2025 was reported at 55.8%, reflecting a year-on-year increase of 3.2 percentage points [1] - R&D investment for Q1 2025 was 18.9 billion yuan, a 21% increase year-on-year, while capital expenditure reached 27.5 billion yuan, up 91% year-on-year, primarily to support AI-related business development [1] Group 3 - The company's value-added services segment generated revenue of 92.1 billion yuan in Q1 2025, a year-on-year increase of 17.2%, with gaming revenue alone reaching 59.5 billion yuan, up 24% [1] - Domestic and international gaming revenues were reported at 42.9 billion yuan and 16.6 billion yuan, respectively, with year-on-year growth of 24% and 22% [1] - The social network segment generated revenue of 32.6 billion yuan, reflecting a year-on-year increase of 7% [1] Group 4 - Marketing services revenue for Q1 2025 was 31.9 billion yuan, a year-on-year increase of 20.2%, driven by enhanced commercialization capabilities of video accounts and mini-programs [2] - The company’s financial technology services segment achieved revenue of 54.9 billion yuan, with growth attributed to consumer loan and wealth management services [2] - The enterprise services segment also saw revenue growth, benefiting from cloud services and merchant technology service fees [2]

Investment Rating - The report assigns an "Accumulate" rating for Tencent Holdings [1] Core Views - The report highlights that Tencent's revenue and profit exceeded expectations, driven by the upgrade of its e-commerce division and the impact of AI on effective advertising and evergreen games, reinforcing capital expenditures [3] Financial Summary - For FY25Q1, Tencent achieved revenue of 180 billion RMB, a year-on-year increase of 12.9%, surpassing market expectations of 175.7 billion RMB. Adjusted net profit reached 61.3 billion RMB, up 22.0% year-on-year, also exceeding the market forecast of 59.7 billion RMB. The gross margin was 55.8%, reflecting a year-on-year increase of 3.2 percentage points [7][10] - The financial outlook for 2025E projects revenue of 725.3 billion RMB, with adjusted net profit expected to be 249.0 billion RMB, reflecting a slight upward revision from previous estimates [7] Business Segments Performance - Value-added services revenue reached 92.1 billion RMB in FY25Q1, a year-on-year increase of 17.2%, with gaming revenue at 59.5 billion RMB, up 24% year-on-year. Domestic and international gaming revenues were 42.9 billion RMB and 16.6 billion RMB, respectively, showing increases of 24% and 22% [7][30] - Marketing services generated 31.9 billion RMB in revenue, a year-on-year growth of 20.2%, driven by enhanced commercialization capabilities of platforms like Video Number and WeChat Search [7][32] - Financial technology and enterprise services revenue grew by 5% year-on-year, reaching 54.9 billion RMB [7][38] Strategic Insights - The report emphasizes that Tencent, as the largest social traffic entry point, is expected to leverage AI to reconstruct platform value. The integration of AI technology is anticipated to enhance the overall growth quality and sustainability of the business [7][39]