ZHESHANG SECURITIES·2025-09-11 09:15Investment Rating - The investment rating for Tencent Holdings is "Buy" [6] Core Views - The report suggests that the new game "Delta Operation" will exceed market expectations, and that features like Video Accounts and Search will continue to drive Tencent's advertising business to achieve growth above the industry average [1][2] Summary by Sections Investment Highlights - The report highlights that Tencent's gaming and advertising businesses are perceived to be in a mature phase, with challenges in achieving growth above the industry average due to a high base in 2024. However, the new game "Delta Operation" is expected to outperform market expectations due to its established game genre and social attributes, which enhance player engagement [2][3] Market Position and Competitive Advantage - Tencent's core competitive advantage lies in its social traffic entry points and its leading understanding of the gaming industry. WeChat has nearly 1.411 billion monthly active users as of the first half of 2025, serving as a primary social entry point in China [3] Recent Market Trends - The report reviews Tencent's recent market performance, noting that from March 2024 to the present, the company has benefited from macroeconomic conditions, liquidity easing, and the recovery of game licenses, leading to revenue growth from key titles [4] Comparison with Overseas Leaders - Tencent's valuation is compared with overseas gaming companies, indicating that its current P/E ratio is lower than that of major U.S. gaming firms and internet advertising platforms like Meta and Google [5] AI Industry Trends - Tencent is actively investing in AI to enhance advertising precision and efficiency. The report notes that AI applications in gaming and advertising are expected to drive further growth [6][10] Performance Forecast and Valuation - The report forecasts Tencent's revenue for 2025-2027 to be 749.96 billion, 834.45 billion, and 924.65 billion yuan, with adjusted net profits of 262.07 billion, 293.55 billion, and 323.79 billion yuan respectively. The target price for 2026 is set at HK$793.08 per share, indicating a potential upside of 25% [12][13]