TENCENT(HK:00700) Zhong Guo Jing Ying Bao·2025-09-17 13:52Core Viewpoint - Tencent Holdings has seen its market capitalization return to 6 trillion HKD, driven by a combination of performance recovery, strategic upgrades, and valuation reassessment, rather than just short-term market sentiment [2][3]. Financial Performance - Tencent's Q2 2025 financial results showed revenue of 184.5 billion CNY, a 15% year-on-year increase, with operating profit at 69.25 billion CNY, up 18% [3]. - Gross margin improved from 53% to 57% year-on-year, and net profit attributable to shareholders reached 55.6 billion CNY, reflecting a 17% year-on-year and 16% quarter-on-quarter growth [3]. - All three main business segments reported significant growth: value-added services revenue increased by 16% to 91.4 billion CNY, advertising revenue rose by 20% to 35.8 billion CNY, and financial technology and enterprise services revenue grew by 10% to 55.5 billion CNY [3]. AI Integration and Business Strategy - Tencent has made substantial investments in AI, with R&D spending reaching 20.25 billion CNY in Q2 2025, a 17% increase year-on-year [6]. - The company has launched over 30 new models in the past year and is actively integrating AI into its business operations, enhancing advertising effectiveness and gaming experiences [7][8]. - AI is seen as a core driver of Tencent's growth, with its applications in advertising and gaming significantly improving user engagement and revenue [7][8]. International Expansion - Tencent's international gaming revenue reached 18.8 billion CNY in Q2 2025, a 35% year-on-year increase, driven by successful titles like PUBG Mobile [9]. - The company is expanding its cloud infrastructure globally, with plans to invest 150 million USD in a new data center in Saudi Arabia and additional centers in Japan [9]. Market Sentiment and Valuation - The stock price recovery is supported by strong financial performance, significant share buybacks, and a shift in market perception towards Tencent as a technology and ecosystem company [10][11]. - Analysts suggest that if Tencent's net profit growth exceeds 15% in 2025, the company could see a valuation uplift, particularly if AI contributions to revenue increase significantly [12].