TENCENT(00700) 广发证券·2025-05-15 06:53Investment Rating - The report assigns a "Buy" rating for Tencent Holdings (00700.HK) with a current price of HKD 521.00 and a fair value of HKD 572.51 [5]. Core Insights - The report highlights strong performance in gaming and accelerated growth in AI-driven advertising, indicating a robust outlook for Tencent's revenue streams [3][10]. - The company is expected to continue investing in AI, which has significantly contributed to the growth of its advertising and gaming sectors [10][11]. Financial Forecast - Revenue projections for Tencent are as follows: - 2023A: RMB 609 billion - 2024A: RMB 660 billion (growth rate: 9.8%) - 2025E: RMB 734.2 billion (growth rate: 11.2%) - 2026E: RMB 790 billion (growth rate: 7.6%) - 2027E: RMB 836.1 billion (growth rate: 5.8%) [4]. - Adjusted net profit forecasts are: - 2023A: RMB 157.7 billion - 2024A: RMB 222.7 billion (growth rate: 41.2%) - 2025E: RMB 258 billion (growth rate: 15.8%) - 2026E: RMB 286.2 billion (growth rate: 10.9%) - 2027E: RMB 310.8 billion (growth rate: 8.6%) [4]. - Earnings per share (EPS) estimates are projected to increase from RMB 16.32 in 2023A to RMB 33.82 in 2027E [4]. Business Performance Overview - In Q1 2025, Tencent reported a revenue of RMB 180 billion, a year-over-year increase of 13% [10]. - The gaming segment generated RMB 595 billion in revenue, reflecting a 24% year-over-year growth [10]. - Advertising revenue reached RMB 319 billion, with a 20% year-over-year increase, driven by demand for video ads and AI enhancements [11]. - Financial and enterprise services revenue was RMB 549 billion, showing a 5% year-over-year growth [11]. Valuation Methodology - The report employs a Sum-of-the-Parts (SOTP) valuation method, estimating the core business value at HKD 572.51 per share, based on various business segments including gaming, marketing services, and financial services [33][36].