TENCENT(00700) 格隆汇·2025-05-20 01:42Core Viewpoint - The company reported strong Q1 2025 financial results, with total revenue of 180 billion yuan, a year-over-year increase of 13%, exceeding Bloomberg consensus by 3% [1] - Non-IFRS net profit reached 61.3 billion yuan, up 22% year-over-year, also surpassing Bloomberg consensus by 3% [1] Group 1: Gaming Business - Domestic and international gaming revenues exceeded expectations, with a record revenue growth of 24% year-over-year, totaling 59.5 billion yuan [1] - The domestic gaming market showed high growth, with revenue of 42.9 billion yuan, a 24% increase year-over-year, surpassing expectations by 7% [1] - Key games like "Honor of Kings" and "Peacekeeper Elite" achieved historical highs in revenue, while new game "Delta Force" showed strong user growth [1] Group 2: International Market - International gaming revenue reached 16.6 billion yuan, growing 23% year-over-year, exceeding expectations by 8% [2] - The growth was driven by Supercell's ongoing revenue increase and stable performance from existing products like PUBG Mobile and COD Mobile [2] - The company expects a similar revenue growth rate for the entire year of 2025, with a projected year-over-year increase of 10% [2] Group 3: Social Networking and Marketing Services - Social networking revenue was 32.6 billion yuan, a 7% year-over-year increase, meeting expectations [2] - Marketing services revenue reached 31.9 billion yuan, up 20% year-over-year, exceeding expectations by 3% due to increased user engagement and AI-driven advertising solutions [2] Group 4: Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services was 54.9 billion yuan, a 5% year-over-year increase, in line with expectations [3] - The growth was driven by improvements in cloud services and e-commerce transaction fees, with AI beginning to positively impact revenue [3] Group 5: Capital Expenditure - Capital expenditure (CAPEX) reached 23 billion yuan, a 60% year-over-year increase, accounting for 13% of revenue [3] - The high CAPEX is aligned with previous guidance and reflects the company's focus on optimizing cash flow through AI infrastructure investments [3] Group 6: AI Developments - The company released an upgraded image generation model, enhancing the speed and quality of generated content for advertising [4] - Ongoing updates in application scenarios are being explored, particularly in integrating AI features into existing platforms like WeChat [4] Group 7: Profit Forecast and Investment Recommendations - Revenue forecasts for 2025-2027 have been slightly adjusted to 728.6 billion, 784.5 billion, and 835.6 billion yuan, reflecting year-over-year growth of 10%, 8%, and 7% respectively [5] - Non-IFRS net profit forecasts for the same period are set at 256 billion, 288.6 billion, and 313.1 billion yuan, with expected year-over-year growth of 15%, 13%, and 9% [5] - The company maintains a "recommended" rating with a target price range of 545.69 to 606.33 Hong Kong dollars based on projected earnings [5]