Core Insights - The company reported Q3 2025 revenue of 192.9 billion yuan, a year-on-year increase of 15%, exceeding Bloomberg consensus expectations of 188.8 billion yuan [1] - Non-IFRS net profit attributable to the parent company reached 70.6 billion yuan, up 18.0% year-on-year, also surpassing Bloomberg consensus [1] - Overall gross margin improved to 56%, up 2.6 percentage points year-on-year, with various business segments showing increased margins [1] Revenue Breakdown - Domestic and international gaming revenue exceeded expectations, with total online gaming revenue at 63.6 billion yuan, a year-on-year increase of 22.8% [2] - Domestic gaming market revenue was 42.8 billion yuan, up 15% year-on-year, benefiting from the success of "Delta Action" and growth in evergreen games [2] - International gaming market revenue reached 20.8 billion yuan, a 43% increase year-on-year, driven by growth from Supercell games and "PUBG MOBILE" [2] Advertising and AI Impact - Advertising revenue grew to 36.2 billion yuan, up 21% year-on-year, benefiting from increased ad exposure and AI-driven ECPM growth [2] - The company enhanced AI applications in advertising creation, delivery, recommendation, and performance analysis, leading to improved click-through and conversion rates [2] Profit Forecast and Investment Rating - The company is expected to maintain strong performance with adjusted net profit forecasts of 255.5 billion yuan, 285.8 billion yuan, and 318.2 billion yuan for 2025-2027 [3] - Corresponding PE ratios (Non-IFRS) are projected at 21, 19, and 17 times for 2025-2027 [3] - The company maintains a "buy" rating due to its solid business barriers and strong ecosystem across gaming, social platforms, advertising, and fintech [3]

Macro Strategy - In 2026, the narrow deficit is expected to reach 5.94 trillion yuan, an increase of approximately 276.5 billion yuan year-on-year, while the broad deficit is projected to be 14.54 trillion yuan, up about 167 billion yuan year-on-year, with a broad deficit rate of approximately 9.8%, a slight decrease of 0.4 percentage points [1][13] - The total fiscal expenditure in 2026 is anticipated to be 43.54 trillion yuan, growing by 3.2% year-on-year, which is a slowdown compared to the previous year's growth rate [1][13] Foreign Trade - China's exports are expected to maintain strong resilience in 2026, with an annual growth rate of around 3%-4%, compared to an estimated 4.5%-5% in 2025 [2][14][15] - The impact of tariffs on exports is expected to ease, with the likelihood of large-scale tariff increases from the U.S. being relatively low [2][15] Industry Analysis - The 2025 Double Eleven sales event saw total e-commerce sales reach approximately 16,950 billion yuan, a year-on-year increase of 14.2%, with comprehensive e-commerce platforms accounting for 16,191 billion yuan, up 12.3% year-on-year [6] - The coal industry is projected to experience a weak equilibrium in supply and demand, leading to fluctuating coal prices in the first half of 2026, with a focus on high-dividend investment logic [7][8] Company Insights - Leap Motor's Q3 performance maintained positive profitability, with revised net profit forecasts for 2025-2027 being 700 million, 3.3 billion, and 6.8 billion yuan respectively, corresponding to PE ratios of 103, 21, and 11 times [9] - Geely's Q3 results met expectations, with an upward revision of the 2025 net profit forecast to 18.1 billion yuan, while the 2026 and 2027 forecasts were adjusted downwards to 19.5 billion and 27.2 billion yuan respectively [11] - Tencent's overall performance exceeded expectations, with adjusted net profit forecasts for 2025-2027 being 255.5 billion, 285.8 billion, and 318.2 billion yuan, maintaining a "buy" rating [12]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [3][39] Core Views - The company continues to release strong performance and possesses significant business barriers. The integration of AI is enhancing the company's gaming and advertising business, leading to continuous breakthroughs in models and applications [3][39] - The overall ecosystem of the company remains robust, with revenue growth in online gaming, social platforms, advertising, and fintech [3][39] Summary by Sections 1. Revenue and Profit Performance - In Q3 2025, the company achieved total revenue of 192.9 billion yuan, a year-on-year increase of 15%, exceeding Bloomberg's consensus estimate of 188.8 billion yuan. Non-IFRS net profit reached 70.6 billion yuan, up 18% year-on-year, also surpassing expectations [9][14] - The overall gross margin for Q3 was 56%, an increase of 2.6 percentage points year-on-year [36] 1.1 Online Gaming Revenue - Q3 2025 online gaming revenue was 63.6 billion yuan, a year-on-year increase of 22.8%. Domestic gaming revenue was 42.8 billion yuan, up 15%, exceeding expectations [19][20] 1.2 Social Network Revenue - Q3 2025 social network revenue was 32.3 billion yuan, a year-on-year increase of 4.5%, driven by growth in mini-game platform service fees and paid membership revenues [23] 1.3 Advertising Revenue - Q3 2025 advertising revenue was 36.2 billion yuan, a year-on-year increase of 21%, benefiting from increased ad exposure and AI-driven improvements in ad effectiveness [25] 1.4 Fintech and Enterprise Services Revenue - Q3 2025 fintech and enterprise services revenue was 58.2 billion yuan, a year-on-year increase of 9.6%, supported by growth in consumer loan services and business payment activities [27] 2. User Engagement Metrics - The combined monthly active users (MAU) of WeChat reached 400 million, a year-on-year increase of 2%. QQ's mobile MAU was 517 million, down 8% year-on-year [30] 3. Margin Improvements - All business segments saw improvements in gross margins, with the advertising business achieving a gross margin of 57%, up 4.0 percentage points year-on-year [36] 4. AI Investment Impact - Increased investment in AI has led to higher sales and management expenses, with sales expenses rising to 11.5 billion yuan, up 22% year-on-year [37] 5. Earnings Forecast and Valuation - The report forecasts adjusted net profits of 255.5 billion yuan, 285.8 billion yuan, and 318.2 billion yuan for 2025, 2026, and 2027, respectively, with corresponding PE ratios of 21, 19, and 17 times [39]