TENCENT(00700) 格隆汇·2025-05-16 17:40Core 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]