Changjiang Securities·2025-05-14 23:31Investment Rating - The investment rating for Tencent Holdings is "Buy" and is maintained [8]. Core Insights - Tencent achieved revenue of 180 billion yuan in Q1 2025, representing a year-on-year increase of 13% and a quarter-on-quarter increase of 4%. Operating profit reached 57.6 billion yuan, up 10% year-on-year, while Non-IFRS net profit attributable to shareholders was 61.3 billion yuan, reflecting a 22% year-on-year growth. Both revenue and adjusted net profit exceeded market expectations [2][5]. Revenue Summary - The revenue growth was driven by: 1. Strong performance of evergreen games and new game launches, leading to record-high revenues in both domestic and overseas markets for Q1 [8]. 2. AI-driven enhancements and optimization of the WeChat transaction ecosystem, resulting in robust advertising growth [8]. 3. Rapid growth in AI-related revenues contributing to a year-on-year increase in cloud service revenues [8]. Profitability Summary - Tencent's profit growth has consistently outpaced revenue growth for 11 consecutive quarters, with a gross margin reaching a near-record level. The gross margin for Q1 was 55.8%, an increase of 3.2 percentage points year-on-year [8]. Capital Expenditure Summary - Capital expenditure in Q1 increased by 91.35% year-on-year to 27.476 billion yuan, accounting for approximately 15% of revenue [8].