Ge Long Hui·2025-08-16 10:44Core Viewpoint - Huatai Securities reports that Tencent Holdings' revenue for the second quarter increased by 14.5% year-on-year, driven by growth in various business segments [1] Revenue Growth - Tencent's revenue growth is attributed to the following segments: - Value-added services grew by 16% - Advertising revenue increased by 20% - Financial technology revenue rose by 10% - Corresponding gross profit margins improved by 3.4, 1.9, and 4.5 percentage points respectively [1] Long-term Outlook - Tencent is positioned as a leading developer in the shooting game sector, with expectations for dual growth from players and commercialization due to rapid domestic penetration - Notable game releases include "Delta Action" in July and the upcoming mobile version of "Valorant" on August 19 - Future game reserves include several important shooting and open-world games [1] Revenue Forecast Adjustments - Huatai Securities has raised Tencent's revenue forecasts for 2025, 2026, and 2027 by 2.7%, 4.7%, and 4.8% respectively - The primary driver for this adjustment is the continued expansion of WeChat stores, which is expected to boost advertising and financial technology growth - The company is also anticipated to benefit from ongoing developments in AI products [1] Target Price and Valuation - Based on a sum-of-the-parts (SOTP) valuation, Huatai Securities has increased Tencent's target price from 614.34 HKD to 742.19 HKD - This new target price corresponds to a 2025 price-to-earnings (PE) ratio of 24.3 times, up from the previous 19.9 times - The rating remains "Buy" [1]