Xin Hua Cai Jing·2025-11-19 15:49Core Viewpoint - DBS Bank maintains a "Buy" rating on Tencent Holdings (00700.HK) and raises the 12-month target price from HKD 786 to HKD 800, citing the strong support from AI applications for Tencent's core business segments: online gaming and online advertising [1] Group 1: Advertising Business - Tencent has launched an automated advertising solution named "AIM+", which shows early data indicating a higher return on investment (ROI) compared to traditional manual advertising methods due to more precise targeting and creative generation [1] - The bank expects that AI-driven improvements in advertising will enhance Tencent's revenue generation capabilities [1] Group 2: Gaming Business - In the gaming sector, AI-driven non-player characters (NPCs), more efficient content creation processes, and precise marketing tools are anticipated to deepen user engagement and improve monetization [1] - Based on the expected business improvements from AI technology, DBS has raised Tencent's adjusted profit forecasts for the fiscal years 2025 to 2027 by 4%, 5%, and 8% respectively [1] Group 3: Capital Expenditure and Supply Chain - Tencent's management has indicated that despite adjustments to the capital expenditure plan for fiscal year 2025 due to chip supply constraints, the company has sufficient chip reserves to meet internal AI application needs, ensuring that long-term revenue growth driven by AI remains unaffected [1] Group 4: Valuation - DBS employs a sum-of-the-parts (SOTP) valuation method, assigning a 20x price-to-earnings ratio to Tencent's core business for fiscal year 2026, resulting in the target price of HKD 800, which corresponds to a 25x price-to-earnings ratio for fiscal year 2026, slightly above the past five-year average of 20x [2]