Changjiang Securities·2025-11-17 13:15Investment Rating - The investment rating for Tencent Holdings is "Buy" and is maintained [7]. Core Views - Tencent's Q3 2025 revenue reached 192.9 billion yuan, a year-on-year increase of 15% and a quarter-on-quarter increase of 5%. Operating profit was 63.6 billion yuan, up 19% year-on-year. Non-IFRS net profit attributable to shareholders was 70.6 billion yuan, an 18% increase year-on-year. Both revenue and adjusted net profit exceeded market expectations [2][4]. Revenue Breakdown - The revenue growth was driven by: 1. Strong performance from both new and existing games, with overseas game revenue and growth rates hitting record highs. Domestic game revenue grew 15% to 42.8 billion yuan, while overseas game revenue increased by 43% to 20.8 billion yuan, marking a record-breaking quarter [7]. 2. AI technology enhancements and strong internal demand led to accelerated growth in advertising revenue, which rose 21% year-on-year to 36.2 billion yuan [7]. 3. Recovery in commercial payments and AI-driven growth in cloud service revenue contributed to a 10% year-on-year increase in financial technology and enterprise service revenue, totaling 58.2 billion yuan [7]. R&D and Profitability - Tencent's R&D investment reached a record high, with Q3 R&D spending at 22.8 billion yuan, an increase of 28% year-on-year. The gross margin for Q3 was 56.4%, reflecting a year-on-year increase of 3.3 percentage points [7]. Capital Expenditure - Capital expenditure in Q3 decreased by 24% year-on-year to 13 billion yuan, accounting for approximately 10.7% of revenue for the first three quarters [7].