Soochow Securities·2025-08-19 13:33Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [1] Core Views - The company's performance exceeded expectations, driven by international gaming and AI-enhanced advertising effectiveness [2][9] - The report highlights strong revenue growth across various segments, with a focus on the integration of AI in gaming and advertising [9][40] Summary by Sections 1. Revenue and Profit Performance - In Q2 2025, Tencent achieved total revenue of 184.5 billion yuan, a year-on-year increase of 14.5%, surpassing Bloomberg's consensus estimate of 178.9 billion yuan [14] - Non-IFRS net profit reached 63.05 billion yuan, up 10.0% year-on-year, also exceeding expectations [14] 1.1 International Gaming Revenue - The network gaming segment generated 59.2 billion yuan, a 22.1% increase year-on-year, outperforming the expected 56.14 billion yuan [19] - The international gaming market contributed 18.8 billion yuan, growing 35.3% year-on-year, driven by titles from Supercell and PUBG Mobile [20] 1.2 Social Network Revenue - Social network revenue was 32.2 billion yuan, up 6.3% year-on-year, benefiting from mobile game virtual goods and video live streaming services [23] 1.3 Advertising Revenue - Advertising revenue reached 35.76 billion yuan, a 19.7% increase year-on-year, driven by improvements in AI advertising platforms and the WeChat ecosystem [25] 1.4 Financial Technology and Enterprise Services - Financial technology and enterprise services revenue was 55.54 billion yuan, a 10.2% increase year-on-year, supported by growth in consumer loans and business payment activities [29] 2. User Engagement Metrics - WeChat's monthly active users (MAU) grew to 1.411 billion, a 2.9% year-on-year increase, while QQ's MAU declined to 532 million, a 6.8% decrease [31] 3. Margin Improvements - Overall gross margin improved to 56.9%, up 3.6 percentage points year-on-year, with all business segments showing margin enhancements [35] 4. Increased AI Investment - Sales expenses rose to 9.41 billion yuan, a 2.8% increase year-on-year, primarily due to AI-related promotional activities [38] 5. Earnings Forecast and Rating - The report raises the adjusted net profit forecast for 2025-2027 to 255.5 billion, 285.8 billion, and 318.2 billion yuan, respectively, with corresponding PE ratios of 19, 17, and 16 [40]