Investment Rating - The report assigns a "Buy" rating for Tencent Holdings with a target price of HK$670, implying an expected share price return of 28.6% and a total return of 29.5% [3][10]. Core Insights - Tencent's 1Q25 results exceeded expectations, with total revenues growing by 13% year-over-year (yoy) to Rmb180.0 billion, driven by strong performance in domestic games and online advertising, which grew by 24% and 20% yoy, respectively [1][2]. - Non-IFRS net profit for 1Q25 was Rmb61.3 billion, reflecting a 22% yoy increase, surpassing consensus estimates [1][2]. - The report highlights the ongoing benefits of AI integration across Tencent's business segments, contributing to higher margins and revenue growth [6]. Revenue Breakdown - Total Value-Added Services (VAS) revenues increased by 17% yoy to Rmb92 billion, with online games revenues at Rmb59.5 billion, up 24% yoy [1][2]. - Online advertising revenues rose by 20% yoy to Rmb31.9 billion, exceeding expectations [1][2]. - Fintech and business services revenues grew by 5% yoy to Rmb54.9 billion, driven by consumer loan services and wealth management [1]. Deferred Revenues - Total deferred revenues increased by 15% yoy to Rmb127.4 billion, with current deferred revenues up 16% yoy [1][2]. Capital Expenditure - Tencent's capital expenditure for 1Q25 was Rmb27.5 billion, representing a significant increase of 91% yoy [1][6].