TENCENT(HK:00700) Hua Er Jie Jian Wen·2025-08-13 00:54Core Viewpoint - Investors are increasingly focusing on Tencent as global tech stocks reach new highs, despite Tencent's market value being $150 billion below its historical peak, representing a 26% gap [1] Valuation Advantage - Tencent's current valuation is attractive, with a forward P/E ratio of 17.6, below its five-year average of 20, while competitors like Meta and Sony are around 22, and Nintendo is close to 40 [1] - The average forecast for Tencent's 12-month forward earnings per share has reached a historical high, with analysts expecting a revenue growth of 11% for the quarter ending in June, marking the third consecutive quarter of double-digit growth [1] Growth Drivers - The growth momentum in Tencent's advertising business is a key highlight, with advancements in AI expected to boost the growth of its video services [2] - Tencent's gaming business is anticipated to be a significant growth engine, particularly with the upcoming launch of the highly anticipated game "Valorant Mobile," which is expected to drive revenue growth from the second half of this year through mid-2026 [3] - The game "Delta Force" is also emerging as a potential long-term franchise, contributing to Tencent's strong cash generation capabilities amid profitability pressures in the broader Chinese internet trading platform sector [4] Investor Sentiment - Investor sentiment towards Tencent is improving, as the cost of hedging its stock has decreased from April's peak, with a majority of analysts maintaining a bullish outlook, reflected in 66 buy ratings, the highest in the region [4]