CICC: Maintains Tencent Holdings "Outperform Industry" Rating with a Target Price of HKD 600

According to Zhitong Finance APP, CICC released a research report stating that the SPARK 2025 Tencent Games conference will be held on April 22, 2025. The conference will announce the latest updates on 46 products, including testing information for several new games. The firm maintains its revenue and profit forecasts for Tencent Holdings (00700) for 2025/2026 unchanged. It maintains an "outperform industry" rating and a target price of HKD 600, corresponding to 20.6x/17.9x 2025e/2026e non-IFRS P/E, while the current stock price trades at 15.8x/13.7x 2025e/2026e non-IFRS P/E.

CICC's main views are as follows:

Overall, the firm believes that the trend for Tencent Games in 2025 remains positive. In the second half of 2025, although domestic games face a high revenue base from last year, the company's evergreen games have strong internal capabilities, and new games are being steadily advanced. The firm expects Tencent Games' revenue to grow by 10% year-on-year for the entire year.

Some games scheduled for release/start testing

Key games are opening reservations/testing, including: 1) The open-world action RPG "Honor of Kings World" based on the "Honor of Kings" IP will open reservations on April 22, with "open world + monster hunting cooperation" as its core selling point, marking Tencent's key attempt in the open-world segment. The game received its license in January this year, and the firm expects it to launch in the second half of this year; 2) The mobile game "Valorant Mobile: Source Action," jointly developed by Riot Games and Photon Studio, will open reservations on April 21. The current domestic version of the PC game "Valorant" has stabilized at over 2 million concurrent users, and the firm expects the mobile version to launch in the second half of 2025; 3) Additionally, games such as "Under the Red Sky," "Counter-Strike: Future," "Wild Origin," and "Out of Control Evolution" have also recently started testing/are in testing. Some scheduled games include: 1) The FPS shooting game "Delta Force," which has already launched in the domestic market, will globally launch on April 22 and start a global esports plan; 2) The domestic 3A shooting game "Dark Zone Breakout: Infinite" will launch on April 29; 3) The shooting RPG game "Goddess of Victory: New Hope," which Tencent is publishing, will launch simultaneously on mobile/PC in May.

Active operation of evergreen games

Apart from new games, Tencent will still focus most of its energy on its evergreen flagship products, such as "Honor of Kings," "Peacekeeper Elite," "League of Legends" IP, "Crossfire" IP, and "Dungeon & Fighter" IP. For example, "Honor of Kings" is about to enter the 55th Black Festival; "Peacekeeper Elite" is actively updating themes, maps, and props, and has become Tencent's first game to integrate DeepSeek, fully utilizing AI empowerment; "Teamfight Tactics" is about to enter the Strong Sound season; "Dungeon & Fighter" has opened reservations for its single-player version on WeGame. According to SensorTower, the firm estimates that Tencent's key domestic games saw rapid year-on-year revenue growth in Q1 2025, with "Peacekeeper Elite" showing the fastest growth rate, and "Honor of Kings," "Crossfire," and others also experiencing good year-on-year growth. "Delta Force" showed rapid quarter-on-quarter growth, which the firm believes demonstrates Tencent's capability in focusing on the operation of evergreen games