TENCENT(HK:00700) Zhi Tong Cai Jing·2025-09-12 14:03Core Insights - The report by Morgan Stanley highlights the potential of AI agents within the WeChat ecosystem, particularly in e-commerce and local services, projecting a significant increase in GMV from 6% in 2024 to 8% by 2030, translating to an incremental revenue of 69 billion to 426 billion yuan for Tencent, with a potential profit increase of 10% to 56% by 2030 [1][2]. WeChat's Current Landscape - WeChat is positioned as a mature transactional ecosystem rather than just a social tool, with a projected retail sales total of 48.8 trillion yuan in China for 2024, where WeChat's e-commerce and local services GMV is approximately 3 trillion yuan, accounting for about 6% of the total [2]. - The platform's advantages include a robust mini-program ecosystem and a payment closure, with WeChat payment expected to exceed 50% of mobile payment transactions in 2024, deeply integrated into millions of merchants [2]. AI Agent Value Proposition - Morgan Stanley categorizes the value created by AI agents into three tiers, each contributing to incremental revenue, with the highest potential reaching 426 billion yuan by 2030 [3]. First Tier: Enhanced Recommendation Matching - The first tier focuses on optimizing user recommendations, potentially generating an incremental revenue of 690 billion yuan by 2030 through improved matching of user intent and social behavior [3][5]. - This optimization could enhance conversion efficiency by 10% to 15%, with revenue derived from transaction fees and customer acquisition service fees [4]. Second Tier: Supply Chain Integration - The second tier involves integrating third-party e-commerce inventories to create a "synthetic market," which could yield an incremental revenue of 1.14 trillion yuan by 2030 [6][7]. - This integration is expected to increase product variety by 30% and improve conversion efficiency by an additional 20% [7]. Third Tier: Dominating Traffic Control - The third tier aims to position WeChat as the primary entry point for consumer decisions, potentially capturing 60% of third-party e-commerce GMV, leading to an incremental revenue of 4.26 trillion yuan by 2030 [8]. - This would significantly enhance WeChat's bargaining power with merchants, allowing for increased commission rates [8]. Financial Projections and Ratings - Morgan Stanley forecasts Tencent's revenue to reach 660.26 billion yuan in 2024, with a growth of 14% to 752.91 billion yuan in 2025 and 14.2% to 859.64 billion yuan in 2026 [9]. - The adjusted EPS is projected to be 23.63 yuan in 2024, increasing to 27.52 yuan in 2025 and 33.51 yuan in 2026 [9]. - The target price for Tencent is set at 685 HKD, based on a 19x PE ratio for 2026, reflecting the company's AI potential and ecosystem advantages [9].