TENCENT(HK:00700) BOCOM International·2025-03-20 10:01Investment Rating - The report assigns a "Buy" rating for Tencent Holdings (700 HK) with a target price raised to HKD 583, indicating a potential upside of 8.0% from the current price of HKD 540 [1][4][50]. Core Insights - The report highlights that AI applications are expected to rapidly integrate into Tencent's ecosystem, contributing to revenue growth. The anticipated revenue for 2025 is projected to be RMB 713.8 billion, reflecting an 8.1% year-on-year increase [2][8]. - The financial performance for Q4 2024 shows total revenue of RMB 172.4 billion, an 11% increase year-on-year, surpassing market expectations. The adjusted net profit reached RMB 55.3 billion, a 30% increase year-on-year [7][8]. - The report emphasizes the strong growth in domestic gaming revenue, which increased by 23% year-on-year, driven by new game launches and the performance of established titles [7][8]. Financial Overview - Revenue projections for Tencent are as follows: - 2023: RMB 609.0 billion - 2024: RMB 660.3 billion - 2025E: RMB 713.8 billion - 2026E: RMB 767.9 billion - 2027E: RMB 818.9 billion - Net profit estimates are: - 2023: RMB 157.7 billion - 2024: RMB 222.7 billion - 2025E: RMB 244.8 billion - 2026E: RMB 268.6 billion - 2027E: RMB 289.5 billion [3][52]. Segment Performance - The report details segment performance for Q4 2024: - Value-added services revenue: RMB 79.0 billion, up 14% year-on-year - Social network revenue: RMB 29.8 billion, up 6% year-on-year - Financial technology and enterprise services: RMB 56.1 billion, up 3% year-on-year - Marketing services revenue: RMB 35.0 billion, up 17% year-on-year [8][45]. Valuation Metrics - The report indicates a projected P/E ratio of 19 times for 2025, with an expected share buyback of HKD 80 billion and a dividend of HKD 41 billion, enhancing shareholder returns [7][8].