UBS-腾讯

Investment Rating - The report assigns a "Buy" rating for Tencent Holdings with a 12-month price target of HK$676.00, up from a prior target of HK$593.00 [5][9]. Core Insights - The report indicates a constructive outlook for Tencent, driven by strong performance in gaming and AI monetization potential. Revenue growth is projected at 12% for domestic games and 19% for international games in 2025E [3][8]. - The company’s capital expenditure plan is estimated at Rmb85-100 billion, aligning with market expectations, and is expected to support margin expansion despite AI-related operating expenses [3][8]. - AI cloud revenue has approximately doubled year-over-year in 2024, with expectations for accelerated growth in cloud services due to increased capital expenditure [3][8]. - The Mini Shops initiative is showing rapid GMV growth, with an estimated Rmb200 billion in 2024, indicating significant long-term growth potential [3][8]. Financial Summary - Total revenue for 4Q24 was Rmb172,446 million, reflecting an 11.1% year-over-year increase [10]. - Non-GAAP net profit for 4Q24 was Rmb55,312 million, a 29.6% increase year-over-year [10]. - The report projects revenues of Rmb660,257 million for 2024E and Rmb735,186 million for 2025E, with a gross profit margin of 52.6% for 4Q24 [4][12]. Valuation Metrics - The report highlights a projected 13% CAGR for EPS from 2024 to 2026, with Tencent's valuation considered attractive at 18x 2025E P/E [8][9]. - The valuation methodology includes a sum-of-the-parts analysis, with core business valuation at Rmb4,646,770 million [13]. Market Position - Tencent remains a key player in the Chinese internet services sector, with a market capitalization of HK$5,037 billion (approximately US$648 billion) [5][34]. - The company has a significant user base of 1.4 billion, providing a strong foundation for future growth in AI monetization and other services [8].