Group 1: Financial Performance - In Q3 2025, Tencent achieved revenue of 192.9 billion yuan, a year-on-year increase of 15.4% [1] - Adjusted operating profit was 72.6 billion yuan, up 18.4% year-on-year, with an adjusted operating profit margin of 37.6%, an increase of 1.0 percentage points [1] - Adjusted net profit reached 70.6 billion yuan, reflecting an 18.0% year-on-year growth, with an adjusted net profit margin of 36.6%, up 0.8 percentage points [1] Group 2: Revenue Breakdown - Value-added services revenue in Q3 2025 was 95.9 billion yuan, a year-on-year increase of 15.9%, with a gross margin of 61.2%, up 3.7 percentage points [2] - Domestic and overseas game revenues were 42.8 billion yuan and 20.8 billion yuan, respectively, showing year-on-year growth of 14.7% and 43.4% [2] - Social network revenue was 32.3 billion yuan, up 4.4% year-on-year, driven by growth in video live streaming, music subscription services, and mini-game platform service fees [2] Group 3: AI and Marketing Services - Marketing services revenue in Q3 2025 was 36.2 billion yuan, a year-on-year increase of 20.8%, benefiting from improved user engagement and ad loading rates [3] - The introduction of the Tencent Advertising AIM+ product matrix supports advertisers in automatic targeting, bidding, and placement optimization [3] - The company’s mixed Yuan image generation model ranks first globally among text-to-image models [3] Group 4: Capital Expenditure and R&D - R&D expenditure was 22.8 billion yuan, with a research spending rate of 11.8%, an increase of 1.1 percentage points year-on-year [1] - Capital expenditure was 13 billion yuan, down 24.0% year-on-year, while cash flow capital expenditures increased by 66.7% to 20 billion yuan [1]

Investment Rating - The report maintains an "Accumulate" rating for Tencent Holdings [2][55]. Core Insights - The report highlights solid revenue and profit growth, driven by AI integration in advertising technology and the expansion of WeChat's AI capabilities [3][4]. - Tencent's revenue for Q3 FY25 reached 192.9 billion RMB, a year-on-year increase of 15.4%, with adjusted net profit rising by 18.0% to 70.6 billion RMB [8][46]. - The report adjusts revenue forecasts for FY25-27 to 752.9 billion, 841.8 billion, and 925.3 billion RMB respectively, reflecting a growth rate of 14.0%, 11.8%, and 9.9% [8][46]. Financial Summary - **Revenue Growth**: - FY25 Q3 revenue: 192.9 billion RMB (+15.4% YoY) - FY25 estimated revenue: 752.9 billion RMB (+14.0% YoY) [5][17]. - **Profitability**: - Adjusted net profit for FY25 Q3: 70.6 billion RMB (+18.0% YoY) - Adjusted net profit margin: 36.6% (+0.8 percentage points YoY) [5][17]. - **R&D Investment**: - R&D expenditure for FY25 Q3: 22.8 billion RMB (+27.6% YoY), representing 11.8% of revenue [14][24]. - **Capital Expenditure**: - Capital expenditure for FY25 Q3: 13.0 billion RMB (-24.0% YoY) [8][46]. Segment Performance - **Value-Added Services**: - Revenue: 95.9 billion RMB (+15.9% YoY), with domestic and overseas game revenues growing by 14.7% and 43.4% respectively [8][27]. - **Marketing Services**: - Revenue: 36.2 billion RMB (+20.8% YoY), benefiting from increased user engagement and AI-driven advertising targeting [8][29]. - **Financial Technology and Enterprise Services**: - Revenue: 58.2 billion RMB (+9.6% YoY), driven by growth in cloud services and WeChat store transactions [8][35]. Earnings Forecast and Investment Recommendations - The report projects adjusted net profits for FY25-27 to be 261.9 billion, 301.8 billion, and 338.3 billion RMB respectively, with growth rates of 17.6%, 15.2%, and 12.1% [8][46]. - A target price of 785 HKD is set for FY25, based on a 25x PE ratio [8][47].

Group 1 - The Hang Seng Tech Index fell by 1.88% as of November 14, 2025, with mixed performance among constituent stocks, including JD Health rising by 6.59% and Baidu Group-SW dropping by 6.81% [1] - Alibaba has secretly launched the "Qianwen" project, aiming to develop a personal AI assistant app to compete with ChatGPT, marking a significant step in its broader efforts to monetize from individual users [1] - The Hang Seng Tech Index ETF (159742) decreased by 1.09%, with a latest price of 0.82 yuan, while it saw a cumulative increase of 0.73% over the past week as of November 13 [1] Group 2 - Tencent reported a Q3 2025 revenue of 192.87 billion yuan, a 15% year-on-year increase, and a net profit of 63.133 billion yuan, up 19%, indicating strong revenue growth driven by its AI strategy [2] - JD Group also showed strong performance in Q3, with AI applications being implemented across retail, health, logistics, and industrial sectors [2] - The Hong Kong stock market is supported by a favorable liquidity environment, with mainland funds driving expansion and allocation trends, suggesting a significant capital presence in the market [2] Group 3 - The latest size of the Hang Seng Tech Index ETF reached 4.555 billion yuan [3] - The ETF's shares reached 5.619 billion, marking a one-year high, with continuous net inflows over the past 11 days totaling 53.455 million yuan [4] - The top ten weighted stocks in the Hang Seng Tech Index account for 68.89% of the index, including Alibaba-W, SMIC, Tencent, and Meituan-W [4]

Group 1 - The Hong Kong stock market has experienced fluctuations since October, with the Hang Seng Tech Index down nearly 10% from its peak, yet there has been a net inflow of 3.7 billion CNY into the E Fund Hang Seng Tech ETF (513010) and 2.4 billion CNY into the Hong Kong Stock Connect Internet ETF (513040) [1] - Tencent's Q3 2025 financial report shows revenue of 192.87 billion CNY, a 15% year-on-year increase, and a net profit of 63.133 billion CNY, up 19% year-on-year, indicating sustained high-quality revenue growth [1] - JD Group also reported strong Q3 performance, with AI applications being implemented across retail, health, logistics, and industrial sectors [1] Group 2 - The Hang Seng Tech Index focuses on technology-related companies listed in Hong Kong, while the China Securities Hong Kong Stock Connect Internet Index covers 30 leading internet companies within the Hong Kong Stock Connect, including major firms like Alibaba and Tencent [2] - Both indices have rolling price-to-earnings ratios below 25, positioned at the 31% and 24% percentiles since their inception, respectively [2] - The E Fund Hang Seng Tech ETF (513010) and the Hong Kong Stock Connect Internet ETF (513040) track these indices, providing investors with convenient access to AI application investment opportunities [2]

Core Insights - Tencent's Q3 performance exceeded market expectations, driven by revenue growth from AI cloud services [1][4] - The company anticipates lower capital expenditures for 2025 compared to previous guidance, but still higher than 2024 [1][16] - The CEO highlighted the ongoing upgrades to the company's AI capabilities, particularly in the WeChat ecosystem [2][24] Financial Performance - Total revenue for Q3 reached 193 billion RMB, a 15% year-over-year increase [4][8] - Gross profit was 109 billion RMB, up 22% year-over-year [4][8] - Non-IFRS operating profit was 73 billion RMB, also reflecting an 18% increase [4][8] Business Segments - Value-added services accounted for 50% of total revenue, with social networks contributing 17% and domestic games 22% [8][9] - Marketing services revenue grew by 21% to 36 billion RMB, supported by increased ad spending across major categories [13] - Financial technology and enterprise services revenue reached 58 billion RMB, a 10% year-over-year increase [14] AI and Cloud Services - The company has sufficient GPU reserves for internal use, which has limited cloud revenue growth due to AI chip availability [2][34] - Tencent is enhancing its AI capabilities, particularly through the upgrade of its mixed Yuan model architecture [2][18] - The company aims to develop an AI assistant within WeChat to help users complete various tasks [2][24] Gaming Performance - Domestic game revenue grew by 15%, driven by titles like "Delta Force" and "Honor of Kings" [9][11] - International game revenue saw a significant increase of 43%, attributed to the early revenue recognition from "Dying Light: Beasts" [9][12] - The success of mobile games like "Valorant" has contributed to a substantial rise in active users [11][12] Strategic Partnerships - Tencent is in constructive discussions with Apple regarding a payment agreement for mini-programs, potentially reducing the commission rate to 15% [3][26] - The partnership aims to enhance the mini-game ecosystem within WeChat, which could positively impact revenue [3][26] Future Outlook - The company expects international game growth rates to slow down, aligning closer to potential trend lines [15] - Capital expenditures for 2025 are projected to be lower than previous guidance but still above 2024 levels, reflecting changes in AI chip supply [16][24] - Tencent continues to explore acquisitions of overseas game studios and aims to bring more self-developed games to global audiences [15][22]

Core Viewpoint - Tencent's Q3 financial report shows solid revenue and profit growth, driven by advancements in AI, international expansion, and the performance of its core businesses [1][5][10]. Group 1: Financial Performance - In Q3, Tencent achieved revenue of 192.87 billion yuan, a 15% year-on-year increase, and a non-IFRS operating profit of 72.57 billion yuan, up 18% [1]. - Marketing services revenue reached 36.24 billion yuan, growing 21% year-on-year, marking 12 consecutive quarters of double-digit growth [5]. - Financial technology and enterprise services revenue grew 10% to 58.2 billion yuan, driven by increased commercial payment activities and demand for AI-related services [5]. Group 2: AI Strategy and Ecosystem - Tencent's AI initiatives are becoming increasingly visible and usable across its core applications, enhancing user experience and engagement [4]. - The AI application "Yuanbao" has been integrated into dozens of Tencent's core applications, showing significant daily active user growth and engagement [4]. - Tencent's R&D expenditure in Q3 was 22.82 billion yuan, with capital expenditure at 12.98 billion yuan, reflecting a strategic focus on AI and infrastructure [4]. Group 3: International Expansion - Tencent's international game revenue grew by 43% year-on-year, surpassing 20.8 billion yuan, driven by strong performance from Supercell games and new releases [7]. - Tencent Cloud has maintained high double-digit revenue growth over the past three years, serving over 90% of leading outbound internet companies [7]. - The number of overseas active service providers has increased by nearly 30% in the past year, with significant growth in the number of overseas mini-programs [8]. Group 4: Long-term Strategy and New Growth Areas - Tencent's long-term strategy is solidifying its core business performance, with gaming revenue growing by 22.8% year-on-year, despite a high base from the previous year [10]. - The WeChat ecosystem continues to show strong momentum, with monthly active users reaching 1.414 billion, and new business areas like WeChat Mini Stores and video accounts experiencing rapid growth [10][11]. - The AI application ecosystem is also expanding, with significant increases in user engagement across various AI features and tools [11].

Core Insights - Tencent Holdings reported Q3 revenue of 192.87 billion yuan, a year-on-year increase of 15% [1] - Non-IFRS operating profit reached 72.57 billion yuan, reflecting an 18% year-on-year growth [1] - CEO Ma Huateng highlighted strong revenue and profit growth driven by healthy trends in gaming, marketing services, fintech, and enterprise services [1] Business Performance - The revenue growth indicates robust performance across multiple business segments, particularly in gaming and marketing services [1] - The increase in operating profit suggests improved operational efficiency and cost management [1] Strategic Initiatives - The company is investing strategically in AI, which is enhancing precision in advertising and user engagement in gaming [1] - Ongoing upgrades to the mixed Yuan foundational model's team and technical architecture are positioned at an industry-leading level [1] - Efforts to promote the Yuan's capabilities and develop AI agents within WeChat are expected to yield positive advancements [1]

Core Insights - The seventh China Smart Retail Conference was held in Shenzhen, focusing on the integration of AI technology with the retail industry and exploring new paths for high-quality development in smart retail [1][4]. Group 1: Event Highlights - The "Smart Retail Laboratory" was officially launched, aimed at exploring paths for digital, intelligent, and smart upgrades for enterprises, reducing trial and error costs, and building a collaborative ecosystem in smart retail [4]. - The "Smart Retail Ecosystem Launch Report" was released, analyzing the current state of smart retail development and predicting future trends, providing important references for enterprises [6]. - The conference recognized nearly 30 companies for their outstanding contributions in technology innovation and industry impact, showcasing the innovative vitality in the smart retail sector [6]. Group 2: AI Integration and Insights - Experts from academia and industry discussed the pathways for AI implementation in retail, emphasizing a shift from enterprise-centered to customer-centered approaches [9]. - Tencent's Vice President highlighted the company's ongoing investment in AI model development, which enhances efficiency and precision in various retail scenarios such as franchise review and marketing strategies [9]. - The need for value reconstruction and systematic integration around consumer-centric models was emphasized, suggesting a collaborative ecosystem among various enterprises [9]. Group 3: Practical Applications and Solutions - The conference focused on practical empowerment and growth strategies, with discussions on AI's role in breaking through challenges in the retail industry [10]. - Eight companies presented core solutions for digital upgrades, covering aspects like cloud platform construction and digital operations, providing diverse paths for enterprises [10]. - A resource docking area and application scenario exhibition hall were set up, showcasing innovative brands and solutions in smart retail and digital operations [12][13].

Core Viewpoint - Tencent reported a revenue of RMB 1845 billion for Q2 2025, representing a 15% year-on-year growth, with a profit attributable to equity holders of RMB 556 billion, up 17% year-on-year [2][6]. Financial Performance - Total revenue for Q2 2025 was RMB 1845 billion, a 15% increase year-on-year. Gross profit reached RMB 1050 billion, up 22% year-on-year. Non-IFRS operating profit was RMB 690 billion, a growth of 18% year-on-year [6][16]. - The net profit attributable to equity holders under non-IFRS was RMB 631 billion, reflecting a 10% year-on-year increase. If excluding the profit contributions from associates, the net profit would have grown by 20% year-on-year [17][16]. Business Segments - Value-added services (VAS) accounted for 50% of total revenue, with social network services contributing 18%, domestic games 22%, and international games 10%. Marketing services made up 19% of total revenue, while fintech and business services accounted for 10% [7][8]. - The gross profit margin for VAS was 60%, driven by the increase in high-margin domestic game revenue and growth in music subscription services [17][8]. Game Performance - Domestic game revenue grew by 17%, supported by titles like "Delta Force" and evergreen games such as "Honor of Kings" and "Peacekeeper Elite" [9][11]. - "Delta Force" achieved over 20 million daily active users in July, marking a significant milestone for the game [11][12]. Marketing Services - Marketing services revenue increased by 20% year-on-year to RMB 360 billion, driven by AI-enhanced advertising technology and the closed-loop advertising growth from the WeChat ecosystem [13][14]. - Video account marketing services saw a revenue increase of approximately 50%, attributed to higher traffic and transaction activity [14]. AI Integration - The company emphasized its investment in AI, which has enhanced user engagement and operational efficiency across various services, including gaming and marketing [5][10]. - AI tools are increasingly utilized to improve game content production speed and scale, as well as to enhance user experience in marketing campaigns [12][34]. Financial Technology and Cloud Services - Financial technology and enterprise services revenue reached RMB 560 billion, growing by 10% year-on-year, with improvements in commercial payment services and consumer loan services [14][15]. - Cloud services revenue growth accelerated due to increased demand for GPU and API token services, indicating a robust market for AI-related cloud solutions [15][29]. Future Outlook - The management expressed optimism about the growth potential in both the gaming and advertising sectors, particularly with the integration of AI technologies [20][21]. - The company is exploring monetization strategies for its AI functionalities, although direct consumer payment models may be challenging in the Chinese market [23][24].

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The report highlights Tencent's strong core performance, establishing a foundation for growth, with Q2 2025 revenue reaching 184.5 billion RMB, a 15% year-on-year increase, and operating profit of 69.2 billion RMB, up 18% [5][13] - The report emphasizes the importance of AI in Tencent's long-term growth strategy, with R&D expenditure in Q2 2025 reaching 20.25 billion RMB, a 17% increase, and capital expenditure soaring to 19.1 billion RMB, a 119% increase [6][14] - The report continues to favor investment in the global AIDC computing power industry chain, satellite internet, and 6G, identifying seven key industry directions for investment [7][17] Summary by Sections 1. Investment Insights - Tencent's core performance is robust, with significant contributions from value-added services, marketing services, and fintech, all showing double-digit growth [5][13] - The report suggests focusing on the AIDC computing power industry chain as a core investment direction, alongside AI applications and satellite internet [17] 2. Communication Data Tracking - As of May 2025, the total number of 5G base stations in China reached 4.486 million, with a net increase of 235,000 stations since the end of 2024 [26] - The number of 5G mobile phone users reached 1.098 billion, reflecting a year-on-year growth of 21.3% [26][31] - 5G mobile phone shipments in May 2025 totaled 21.19 million units, accounting for 89.3% of total shipments, although this represents a 17% year-on-year decline [26][36] 3. Operator Performance - The report notes strong growth in the cloud services of the three major operators, with China Mobile's cloud revenue reaching 100.4 billion RMB in 2024, a 20.4% increase [43] - The ARPU values for the three major operators remained stable, with slight variations noted [43][49] 4. Recommended Investment Targets - The report recommends specific companies within the AIDC computing power construction, network equipment, IT equipment, cloud computing platforms, AI applications, and satellite internet sectors [18][19][20][21][24]