TENCENT(00700) 华安证券·2025-03-05 16:17Investment Rating - The investment rating for Tencent Holdings is "Buy" (maintained) [1] Core Views - Tencent is deeply integrating its products with DeepSeek, showcasing the value of its ecosystem across multiple scenarios. The integration of AI technology into its products is aimed at enhancing intelligence levels and capturing market share, which is crucial for finding new growth paths in the application market. Tencent's ability to combine AI capabilities with its core services in social, content, and finance is creating a responsive network of intelligent services that could generate network effects difficult for competitors to replicate [4][5]. Summary by Sections To C (Consumer Segment) - Several consumer products, including WeChat, QQ Music, and QQ Browser, have integrated DeepSeek. WeChat, with over 1 billion MAUs, is expected to accelerate AI functionality penetration in consumer scenarios due to its content ecosystem. Tencent Yuanbao has also seen significant downloads, ranking first in the Apple China free app download list shortly after integrating DeepSeek [5]. To B (Business Segment) - Tencent's WeChat for Enterprises has launched an intelligent robot that integrates DeepSeek, allowing businesses to create custom "smart assistants" for various internal tasks. This development is expected to enhance user engagement and willingness to pay. Tencent Docs has also integrated DeepSeek, enabling AI functionalities that could increase user payment penetration and drive growth in the B2B market [5][6]. Advertising - The report highlights the potential for AI to enhance advertising conversion rates significantly. AI is transforming the advertising industry by improving the entire chain from production to user experience, similar to the impacts seen with Google and Meta. Tencent's advertising business is expected to see substantial improvements in both revenue and profit due to AI integration [6][7]. Gaming - The gaming sector is stable, with a focus on revitalizing older games through AI capabilities. Tencent's integration of DeepSeek into popular games like "Peacekeeper Elite" is expected to enhance user experience and retention, thereby improving average revenue per user (ARPU) [7]. Financial Projections - The projected net profits for Tencent for 2024, 2025, and 2026 are 220.80 billion, 238.91 billion, and 260.27 billion CNY respectively, with year-over-year growth rates of 40.03%, 8.20%, and 8.94%. The company is expected to maintain a competitive advantage through its comprehensive integration of DeepSeek [8][10].