TENCENT(HK:00700) BOCOM International·2025-03-26 10:54Investment Rating - The report assigns a "Buy" rating for Tencent Holdings (700 HK) with a target price of HKD 583.00, indicating a potential upside of 16.1% from the current price of HKD 502.00 [4][31]. Core Insights - Tencent's evergreen games contribute approximately 20% to the total revenue, with a significant focus on MOBA and shooting genres, showing strong overseas growth that outpaces the industry [2][8]. - The company is expected to maintain its leading position in the gaming industry, with a projected 9% revenue growth in 2025, contributing 30% to total revenue [17][22]. - Tencent's market share in the domestic market remains stable at around 55%, while overseas gaming revenue is expected to grow at a compound annual growth rate of 11% from 2022 to 2024, surpassing the overall market growth of 7% [22][24]. Financial Overview - Revenue projections for Tencent are as follows: - 2023: RMB 609,015 million - 2024: RMB 660,257 million (up 8.4% YoY) - 2025E: RMB 713,818 million (up 8.1% YoY) - 2026E: RMB 767,880 million (up 7.6% YoY) - 2027E: RMB 818,920 million (up 6.6% YoY) [3][32]. - Net profit estimates are: - 2023: RMB 157,688 million - 2024: RMB 222,703 million (up 44.1% YoY) - 2025E: RMB 244,774 million (up 12.0% YoY) - 2026E: RMB 268,648 million (up 11.3% YoY) - 2027E: RMB 289,453 million (up 8.9% YoY) [3][32]. Game Performance and Strategy - Tencent's evergreen games are projected to generate a total revenue of approximately RMB 1,300-1,420 million in 2024, with a significant contribution from new titles like "Dungeon & Fighter: Origin" and "Delta Force" [7][11]. - The company has a robust pipeline of over 25 upcoming games, primarily based on popular IPs, which are expected to enhance its evergreen game portfolio [11][27]. - The report highlights the differentiation in game genres among competitors, with Tencent focusing on MOBA and shooting games, while other companies like NetEase and miHoYo target MMORPG and RPG genres respectively [14][15].