TENCENT(00700) 交银国际证券·2025-03-20 10:10Investment Rating - The report assigns a "Buy" rating for Tencent Holdings (700 HK) with a target price raised to HKD 583, indicating a potential upside of 8.0% from the current price of HKD 540 [1][4][50]. Core Insights - The report highlights that AI applications are expected to rapidly integrate into Tencent's ecosystem, contributing to revenue growth. The anticipated revenue for 2025 is projected to reach RMB 713.8 billion, reflecting an 8.1% year-on-year growth [2][8]. - The report emphasizes strong performance in various segments, including a 20% increase in gaming revenue and a 60%+ growth in video advertising revenue, driven by AI enhancements [7][8]. Financial Overview - Revenue projections for Tencent are as follows: - 2023: RMB 609,015 million - 2024: RMB 660,257 million - 2025E: RMB 713,818 million - 2026E: RMB 767,880 million - 2027E: RMB 818,920 million - Year-on-year growth rates are expected to decline gradually from 9.8% in 2023 to 6.6% in 2027 [3][52]. - Net profit forecasts are: - 2023: RMB 157,688 million - 2024: RMB 222,703 million - 2025E: RMB 244,774 million - 2026E: RMB 268,648 million - 2027E: RMB 289,453 million - The report anticipates a significant increase in earnings per share (EPS), from RMB 16.33 in 2023 to RMB 31.91 in 2027 [3][52]. Segment Performance - The report details segment performance for Q4 2024: - Total revenue reached RMB 172,446 million, up 11% year-on-year - Online gaming revenue increased by 23% year-on-year, with local games contributing significantly - Marketing services revenue grew by 17%, driven by video and search advertising [8][9]. - The report notes that the gross margin improved to 53% due to the growth of high-margin businesses [7][8]. Valuation - The report estimates a price-to-earnings (P/E) ratio of 19 times for 2025, with a projected share buyback of HKD 80 billion and dividends of HKD 41 billion, enhancing shareholder returns [7][8].