Investment Rating - The investment rating for Tencent Holdings is "Outperform the Market" [4][25][28] Core Views - Tencent's revenue growth accelerated, driven by strong performance in advertising and gaming, with a year-on-year revenue increase of 11% in Q4 2024 [1][11] - The company is actively investing in AI applications, with R&D expenses increasing by 16% year-on-year to 31.4 billion yuan in Q4 2024, indicating a commitment to AI development [2][14] - The gaming segment showed robust growth, with online gaming revenue rising by 20% year-on-year, supported by a strong pipeline of evergreen games [3][17] - Financial technology and enterprise services revenue grew by 3% year-on-year, with a notable recovery in payment services [4][23] - The company plans to increase its annual dividend by 32% to 4.50 HKD per share and intends to repurchase shares worth at least 80 billion HKD [8][25] Summary by Sections Revenue and Profitability - In Q4 2024, Tencent achieved revenue of 172.4 billion yuan, a year-on-year increase of 11.1%, primarily driven by advertising and gaming [1][11] - Adjusted operating profit for Q4 2024 was 59.5 billion yuan, up 20% year-on-year, with a Non-IFRS net profit of 55.3 billion yuan, reflecting a 30% increase [1][11] R&D and Capital Expenditure - R&D expenses in Q4 2024 reached 31.4 billion yuan, a 16% increase year-on-year, with expectations for continued growth in 2025 [2][14] - Capital expenditures surged to 36.6 billion yuan in Q4 2024, a remarkable increase of 386% year-on-year, with projections for 2025 to account for 12-15% of revenue [2][14] Gaming and Advertising - Online gaming revenue for Q4 2024 was 49.2 billion yuan, a 20% increase year-on-year, with deferred revenue at 100.1 billion yuan, up 16% [3][17] - Advertising revenue in Q4 2024 was 35 billion yuan, growing 17% year-on-year, driven by strong demand for video accounts and mini-programs [22][26] Financial Technology and Enterprise Services - Financial technology and enterprise services revenue reached 56.1 billion yuan in Q4 2024, a 3% year-on-year increase, with signs of recovery in payment services [4][23] - AI cloud revenue is expected to nearly double in 2024, reflecting the company's strategic focus on AI capabilities [4][23] Shareholder Returns - Tencent plans to increase its annual dividend by 32% to 4.50 HKD per share and aims to repurchase shares worth at least 80 billion HKD [8][25]