Summary of Tencent Holdings (0700.HK) Conference Call Company Overview - **Company**: Tencent Holdings (0700.HK) - **Event**: Asia Leaders Conference 2025 - **Date**: September 4, 2025 - **Presenter**: Mr. James Mitchell, Chief Strategy Officer Key Industry Insights 1. **AI Model Development**: Tencent has re-architected its AI model strategy, with Hunyuan models achieving state-of-the-art (SOTA) performance in China, closing the gap with global models. The launch of HunyuanWorld-Voyager 3D model and its leading rankings on Hugging Face were highlighted [1][2][3] 2. **Revenue Streams from AI**: The company is leveraging AI to enhance revenue across gaming and marketing services, with high margins expected to offset GPU depreciation expenses. Tencent's non-GPU capital expenditure is lower compared to global peers due to cost efficiencies [2][3] 3. **Gaming Industry Growth**: Tencent is well-positioned in the gaming sector, which continues to grow, particularly in China and emerging markets. AI is expected to improve user experience and R&D efficiency, with significant content production efficiency gains anticipated [3][4] 4. **Advertising Services**: Tencent is aggressively deploying AI in its advertising business, which currently captures one-third of China's internet time but is under-monetized. AI-driven ad technology is expected to enhance click-through rates and conversion [8][9] Financial Performance and Projections 1. **Revenue Growth**: Tencent forecasts a revenue growth of 13% year-over-year for 3Q25E and 2025E, with an 18% and 17% growth in EPS respectively [11][12] 2. **Financial Summary**: - Total revenues projected to reach RMB 660.26 billion in 2024 and RMB 746.72 billion in 2025E - Net profit (Non-GAAP) expected to be RMB 222.70 billion in 2024 and RMB 256.39 billion in 2025E - Diluted EPS (Non-GAAP) projected at RMB 23.67 for 2024 and RMB 27.69 for 2025E [13][16] Strategic Initiatives 1. **Capital Allocation**: Tencent is committed to disciplined capital allocation, with plans for share buybacks and dividends supported by improved liquidity in China [10][11] 2. **E-commerce and Cloud Growth**: The company is enhancing its Weixin super-app and expanding its closed-loop e-commerce capabilities, positioning Tencent Cloud as a top player in China's public cloud market [11][12] Risks and Challenges 1. **Industry Competition**: Increased competition in performance-based advertising and potential delays in game launches could impact growth [14] 2. **FinTech and Cloud Growth**: Slower-than-expected growth in these sectors poses a risk to overall performance [14] Conclusion - Tencent is positioned as a key beneficiary of AI advancements in the Chinese internet landscape, with a robust growth outlook across its major business lines. The company maintains a "Buy" rating with a target price of HK$701, reflecting a 17.1% upside potential from the current price of HK$598.50 [11][16]