TENCENT(HK:00700) Tianfeng Securities·2025-05-15 02:25Investment Rating - The investment rating for Tencent Holdings is "Buy" with a target price not specified [7] Core Insights - The company's performance in Q1 2025 showed strong revenue and profit growth, with revenue increasing by 13% year-on-year and Non-IFRS net profit rising by 22%, significantly exceeding Bloomberg consensus expectations [1] - AI capabilities have made substantial contributions to the company's performance, particularly in advertising and gaming sectors [2] - The company is expected to maintain strong growth in the AI application field, supported by its competitive advantages in various aspects such as social relationships and content ecosystems [2] Summary by Sections Overall Performance - In Q1 2025, Tencent's revenue grew by 13% year-on-year, gross profit increased by 20%, and Non-IFRS operating profit rose by 18%, with Non-IFRS net profit up by 22%, all surpassing Bloomberg consensus estimates [1] - The revenue exceeded expectations mainly due to strong growth in gaming and advertising [1] - The gross margin for Q1 2025 was higher than expected, driven by better-than-expected margins in value-added services, fintech, and enterprise services [1] Gaming Sector - Q1 2025 network gaming revenue increased by 24% year-on-year, significantly above the expected 15% [3] - Domestic gaming revenue also grew by 24%, while overseas gaming revenue rose by 23%, both exceeding Bloomberg forecasts [3] - Upcoming game releases, particularly "Valorant Mobile," are anticipated to perform well due to strong pre-registration numbers [3] Marketing Services - Marketing services revenue in Q1 2025 grew by 20% year-on-year, surpassing the expected 17% [4] - The company is enhancing its advertising technology platform through AI capabilities, which is expected to improve advertising effectiveness [4] Financial Technology and Business Services (FBS) - Financial technology and enterprise services revenue increased by 5% year-on-year, in line with expectations, with a gross margin of 50%, exceeding forecasts by 2.7 percentage points [5] Investment Recommendations - The report maintains a forecast for Non-IFRS net profit of 2,649 billion for 2025, with an upward revision for 2026 to 2,965 billion [6] - The stock is currently trading at a lower valuation compared to historical averages, indicating potential for growth [6]