TENCENT(00700) 国证国际证券·2025-01-07 07:56Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [5][3] - The target price is set at 496.8 HKD, representing a potential upside of 21.3% from the recent closing price of 409.4 HKD [5][3] Core Insights - Tencent was added to the U.S. Department of Defense's "Section 1260H List" on January 7, 2025, which targets companies with ties to the Chinese military [1][2] - Despite the listing, the report suggests that Tencent's core business will not be significantly impacted, and there is a strong possibility of being removed from the list in the future [2][3] - Tencent's business continues to progress well, with new product approvals and features being launched, indicating a positive outlook for shareholder returns in 2024 and 2025 [3] Summary by Sections Company Overview - Tencent was unexpectedly included in the "Section 1260H List," which is updated annually to identify companies linked to the Chinese military [9][10] - The inclusion has led to a significant drop in ADR prices, but Tencent has stated that this is a misunderstanding as they do not operate in the military sector [2][11] Financial Performance - Tencent's revenue is projected to grow from 660.4 billion RMB in 2024 to 802.1 billion RMB in 2025, with a gross margin improvement from 52.8% to 53.5% [15] - The net profit is expected to increase from 193.1 billion RMB in 2024 to 249.8 billion RMB in 2025, reflecting a strong growth trajectory [15] Shareholder Value - Tencent has completed a share buyback program amounting to 112 billion HKD, significantly reducing its total share count and enhancing shareholder value [12] - The company plans to evaluate further buyback opportunities based on market conditions after the completion of the current program [12]