Core Insights - The company reported a 6% year-on-year revenue increase to $1.523 billion for Q1 of FY2026, exceeding expectations by 1% [1] - Adjusted operating profit was approximately $336 million, with an operating margin of 22%, reflecting a 1 percentage point year-on-year expansion [1] - Adjusted net profit attributable to shareholders was $258 million, corresponding to a net profit margin of 17% [1] Performance Highlights - The study abroad-related business performed better than expected, with preparatory and consulting revenues increasing by 1% and 2% year-on-year, compared to a previous forecast of -5% [1] - The college/adult education segment maintained a robust growth rate, with a 14% year-on-year revenue increase [1] - The K9 new business segment saw a 15% year-on-year revenue growth, with learning machines outperforming non-subject areas [1] - Non-subject training enrollment increased by 10% year-on-year to 530,000, while paid users of the intelligent learning system and devices rose by 40% year-on-year to 452,000 [1] - The number of teaching points reached 1,347, an increase of 29 points or 2% from the previous quarter, within the company's expansion pace [1] - The company announced a cash dividend of $190 million and a $300 million share repurchase plan, which is better than previous expectations [1] FY2026 Outlook - Management maintains the FY2026 group revenue guidance, expecting a year-on-year growth rate of 5-10%, with Q2 revenue growth projected between 9-12%, compared to a previous expectation of 9% [2] - Concerns regarding business growth are alleviated by improved retention rates in K12 business and product quality enhancements, which are expected to stabilize revenue growth [2] - The study abroad-related business may remain under pressure, but is expected to benefit from a projected over 25% year-on-year increase in youth language training revenue and expansion in non-English-speaking countries' consulting services [2] - Overall revenue growth for FY2026/27/28 is anticipated to exceed 10%, with a continued trend of profit margin expansion [2] Valuation - The company remains optimistic about the demand and growth prospects for K12 education-related businesses, with steady revenue growth and potential for profit margin optimization [2] - Despite recent impacts on the study abroad-related business, it continues to lead the industry [2] - Using the SOTP valuation method, the company assigns a 15x P/E ratio for K12 business and an 8x P/E ratio for study abroad business, with corresponding profit growth rates of +25% and -7% [2] - The target price has been raised to HKD 55 / USD 71 (EDU US/Buy) from HKD 46 / USD 59, maintaining a buy rating [2]

Core Insights - The company is expected to achieve a revenue of 188.6 billion yuan in Q3 2025, representing a year-on-year growth of 13% [1] - The growth in value-added services is projected to be 91.6 billion yuan, with gaming revenue at 59.1 billion yuan (YoY +14%) and social networking at 32.6 billion yuan (YoY +5%) [1] - Online advertising revenue is anticipated to reach 36.7 billion yuan, showing a year-on-year increase of 22% [2] - Financial technology and enterprise services are expected to generate 58.9 billion yuan, with a growth rate of 11% [2] Gaming Sector - Revenue from gaming is projected to grow by 14% year-on-year in Q3 2025, with domestic and overseas markets growing by 8% and 29% respectively [1] - The domestic gaming market remains stable, with the shooting genre performing particularly well, and the game "Delta Force" expected to exceed 8 billion yuan in single-quarter revenue [1] Marketing Services - Revenue from marketing services is expected to increase by 22% year-on-year in Q3 2025, driven primarily by the WeChat ecosystem [2] - The advertising business benefits from strong performance in video accounts, mini-programs, and search ads, with improved advertising efficiency and conversion rates due to the synergy of content ecology and AI capabilities [2] Financial Technology and Enterprise Services - Revenue in this segment is projected to grow by 11% year-on-year in Q3 2025, with stable performance in payment services and double-digit growth in wealth management and micro-loan services [2] - Cloud business is expected to accelerate, with a year-on-year growth rate likely to exceed 20% [2] Profit Forecast and Investment Rating - The company has adjusted its profit expectations, forecasting revenues of 748.6 billion yuan, 840.3 billion yuan, and 923.6 billion yuan for 2025-2027 [2] - The projected NON-IFRS net profit for the same period is 257.8 billion yuan, 295.4 billion yuan, and 329.9 billion yuan, with corresponding EPS of 28, 32, and 36 yuan [2] - Based on the SOTP valuation method, the target market value for Tencent Holdings in 2026 is set at 6.5 trillion yuan, corresponding to a target price of 773 HKD, maintaining a "buy" rating [2]

Core Viewpoint - Tencent Holdings has seen a significant stock price increase, reaching a new high since June 2021, driven by strong buyback activities amid major shareholder Prosus's continued reduction of its stake [1]. Group 1: Stock Performance and Buyback - On July 23, Tencent's stock price surged nearly 5%, closing at 552 HKD per share, with a total market capitalization of 50,594 billion HKD [1]. - Tencent has set a buyback target of 80 billion HKD for 2025, having already repurchased 400.43 billion HKD worth of shares, achieving approximately 50.1% of its target as of July 20 [1]. Group 2: Earnings Forecast - Analysts from Guohai Securities predict Tencent will achieve a revenue of 1,796 million RMB in Q2 2025, representing a year-on-year growth of 11%, with a NON-IFRS operating profit of 672 million RMB, up 15% [2]. - Another optimistic forecast from Guoxin Securities estimates Q2 2025 revenue at 1,801 million RMB, a 12% increase year-on-year, with a NON-IFRS net profit of 645 million RMB, reflecting a 13% growth [4]. Group 3: Fund Holdings and Changes - Public funds have reduced their holdings in Tencent, with 1,198 funds collectively holding approximately 1.67 million shares, a decrease of 1,730,430 shares compared to the previous quarter [5]. - Notably, the E Fund Blue Chip Select Mixed Fund, managed by renowned fund manager Zhang Kun, reduced its Tencent shares by 770,000 but still maintains Tencent as its largest holding [7]. Group 4: ETF Activity - ETFs have emerged as the main force in increasing Tencent's holdings, collectively adding 553,000 shares, with significant increases from various ETFs such as the E Fund China Internet ETF and the Hong Kong Technology ETF [9].