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<Research>CICC: TENCENT (00700.HK) Balances Shareholder Return with AI Investment; TP $600
Recommend 7 Positive 9 Negative 4 |
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TENCENT (00700.HK)'s 4Q24 game revenue increased rapidly, with 4Q24 revenue hiking by 20% to RMB49.2 billion, beating CICC's expectation, CICC released a research report saying. Of which, overseas game revenue grew by 15% YoY, while “PUBG M”, Supercell's “Brawl Stars” and other games performed strongly. Domestic game revenue rose by 23% YoY, driven by games such as "Game for Peace” and “DNF Mobile”. In the face of long-term AI opportunities, the Company is striving to balance AI capital expenditure with immediate shareholder returns to maximize long-term shareholder returns, with the Company's actual dividend in 2024 to be $32 billion and the completion of a $112 billion buyback in 2024. Based on TENCENT's revenue growth in advertising and cloud computing, CICC previously raised its 2025/2026 revenue forecasts by 1%/ 2% to RMB717.2 billion/ RMB757.6 billion each, and maintained its 2025/2026 non-IFRS net profit forecasts unchanged, with rating kept at Outperform. Due to the upward shift in market valuation, the broker has raised its target price by 8.5% to $600, corresponding to projected 2025 non-IFRS PE ratio of 20.6x. AAStocks Financial News |
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