Investment Rating - The investment rating for Tencent Holdings is "Outperform the Market" (maintained) [2][8][23] Core Views - Tencent is expected to achieve revenue of CNY 194.6 billion in Q4 2025, representing a year-on-year growth of 13%. The network advertising sector is anticipated to perform steadily, benefiting from the release of advertising inventory and AI integration. The gaming business is expected to show strong performance, particularly with the game "Delta Operation" [4][9] - The company is increasing its investment in AI, which is expected to offset some operational leverage release. The AI investment will primarily manifest in R&D expenses, projected to grow by 28% in Q4 2025 [4][10] - The gaming segment is projected to generate revenue of CNY 58 billion in Q4 2025, with a year-on-year growth of 18%. Domestic game revenue is expected to grow by 16%, supported by established titles like "Honor of Kings" and "Peacekeeper Elite" [5][15][21] - Marketing services revenue is expected to reach CNY 41.3 billion in Q4 2025, reflecting an 18% year-on-year increase, driven by AI enhancements in advertising efficiency [6][19] - Financial technology and enterprise services are projected to grow by 9% year-on-year, with revenue expected to reach CNY 61.2 billion in Q4 2025, primarily driven by payment services [20] Summary by Relevant Sections Financial Performance - Q4 2025 revenue is expected to be CNY 194.6 billion, with a 13% year-on-year increase. Non-IFRS operating profit is projected at CNY 68.1 billion, up 15% year-on-year, and net profit is expected to be CNY 65.2 billion, reflecting an 18% increase [4][10][11] - The expected Non-IFRS net profit margin is 34% for Q4 2025 [10] Gaming Business - The gaming revenue forecast for Q4 2025 is CNY 58 billion, with an 18% year-on-year growth. Domestic game revenue is expected to grow by 16%, while overseas game revenue is projected to increase by 22% [5][21] Marketing Services - Marketing services revenue is anticipated to be CNY 41.3 billion in Q4 2025, marking an 18% year-on-year growth. AI-driven enhancements are expected to improve advertising efficiency significantly [6][19] Financial Technology and Enterprise Services - Revenue from financial technology and enterprise services is expected to reach CNY 61.2 billion in Q4 2025, with a 9% year-on-year growth, primarily driven by payment services [20]

Core Viewpoint - 2024 is a bustling year for China's internet industry, with a significant shift towards AI applications, overshadowing previous trends like the metaverse [3][4]. Financial Performance - Major internet companies reported their revenue and profit for 2024, showcasing varied growth rates across the board: - JD: Revenue of 115.88 billion, up 7%; Net profit of 41.4 billion, up 71% [5] - Alibaba: Revenue of 98.18 billion, up 6%; Net profit of 120.4 billion, up 20% [5] - Tencent: Revenue of 66.03 billion, up 8%; Net profit of 194.1 billion, up 68% [5] - Pinduoduo: Revenue of 39.38 billion, up 59%; Net profit of 112.4 billion, up 87% [5] - Xiaomi: Revenue of 36.59 billion, up 35%; Net profit of 2.45 billion, up 23% [5] - Baidu: Revenue of 13.31 billion, down 1%; Net profit of 2.38 billion, up 17% [5] - Kuaishou: Revenue of 12.69 billion, up 12%; Net profit of 1.53 billion, up 140% [5] - Bilibili: Revenue of 2.68 billion, up 19%; Net loss of 0.14 billion, up 72% [5] Gaming Sector - Tencent remains the leader in the gaming sector with revenue of 197.7 billion, up 10% [7]. - Bilibili's gaming revenue reached 5.6 billion, with a significant growth of 40% [8]. Video Sector - Tencent Video's subscription revenue grew by 3%, with 113 million subscribers [10]. - Bilibili's diverse monetization strategies led to a 500% increase in creator income [10]. E-commerce Sector - Alibaba's Taotian Group reported revenue of 136.1 billion, up 5% [12]. - JD's retail revenue reached 307.1 billion, up 14.7% [12]. - Pinduoduo's revenue for the quarter was 110.1 billion, with a profit of 108.4 billion, up 85% [12]. Smart Hardware - Xiaomi's smartphone revenue was 191.8 billion, up 23%, with a strong focus on high-end models [14]. - Revenue from electric vehicles reached 32.8 billion, contributing 9% to overall revenue [14]. Advertising Revenue - Kuaishou's online marketing services accounted for 57% of total revenue, reaching 72.4 billion, up 20% [16]. - Bilibili's advertising revenue grew by 28%, reaching 8.2 billion [16]. International Expansion - Tencent's international gaming revenue was 58 billion, up 9% [18]. - Xiaomi's overseas revenue reached 153.3 billion, accounting for 41.9% of total revenue [18]. AI Development - Baidu's non-online marketing revenue was 31.7 billion, up 12%, driven by AI cloud services [23]. - Tencent and Alibaba are also heavily investing in AI, with significant revenue growth in their respective AI services [24].