Orient Securities·2025-08-20 07:00Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of 673.68 HKD [5][3] Core Views - The report highlights that AI-driven growth in advertising and gaming is expected to continue, with significant contributions from long-standing games and the upcoming launch of "Valorant" [9][3] - The forecast for IFRS net profit for 2025-2027 is adjusted to 223.1 billion, 257.7 billion, and 297 billion RMB respectively, reflecting an upward revision based on improved expectations for gaming, advertising, and payment services [3][9] Financial Performance Summary - For 2023A, the operating revenue is projected at 609,015 million RMB, with a year-on-year growth of 9.82% [4] - The operating profit for 2023A is expected to be 152,784 million RMB, showing a significant year-on-year increase of 52.76% [4] - The net profit attributable to shareholders for 2023A is forecasted at 115,216 million RMB, with a year-on-year decline of 38.79% [4] - The report anticipates a recovery in net profit growth, with projections of 68.44% growth in 2024A and steady growth rates of around 15% for the following years [4][3] Revenue Breakdown - The report indicates that the revenue from value-added services reached 914 billion RMB in Q2 2025, with a year-on-year increase of 16% [9] - Gaming revenue for Q2 2025 is expected to be 592 billion RMB, reflecting a year-on-year growth of 22% [9] - Marketing services revenue is projected at 358 billion RMB for Q2 2025, with a year-on-year increase of 20% [9] Valuation Metrics - The report provides a sum-of-the-parts (SOTP) valuation, indicating a target price of 673.68 HKD, which reflects a price-to-earnings (P/E) ratio of 22 for 2025E [3][11] - The report also notes a projected P/B ratio of 5 for 2025E [4][11] Market Performance - The stock has shown a strong performance with a 60.41% increase over the past 12 months [6] - The report notes that the stock price as of August 19, 2025, was 592.5 HKD, with a 52-week high of 600 HKD and a low of 361.64 HKD [5]