UBS: Reiterates Tencent as the industry favorite, target price raised to HKD 720
UBS released a research report stating that Tencent's second-quarter performance significantly exceeded expectations, with revenue growing 15% year-on-year, 3% higher than market expectations. Adjusted operating profit increased 18% year-on-year, surpassing expectations by 5%, mainly benefiting from margin expansion. During the period, online gaming and advertising businesses performed strongly, and UBS believes this can provide some visibility for revenue in the second half of the year. UBS reiterated Tencent as the industry favorite, raising the target price from HKD 710 to HKD 720, maintaining a "Buy" rating, and increasing the earnings per share forecast for 2025 to 2027 by 3% to 4%. Looking ahead to the second half of the year, UBS expects the launch of the PC version of "Delta Action," the mobile game "Valorant," and the 10th anniversary event of "Honor of Kings" to drive growth. The outlook on AI monetization and capital expenditure is positive, with second-quarter capital expenditure decreasing by 30% quarter-on-quarter. UBS indicated that investors should understand this as a short-term impact of GPU import restrictions, and management also stated that it will continue to adopt a diversified chip strategy and improve efficiency
According to the Zhitong Finance APP, UBS released a research report stating that Tencent Holdings (00700) exceeded expectations in its second-quarter performance, with a year-on-year revenue growth of 15%, surpassing market expectations by 3%. Adjusted operating profit increased by 18% year-on-year, exceeding expectations by 5%, mainly benefiting from margin expansion. During the period, online gaming and advertising businesses performed strongly, and UBS believes this provides some visibility for revenue in the second half of the year. UBS reiterated Tencent as the industry favorite, raising the target price from HKD 710 to HKD 720, maintaining a "Buy" rating, and increasing the earnings per share forecast for 2025 to 2027 by 3% to 4%.
Looking ahead to the second half of the year, UBS expects the launch of the PC version of "Delta Action," the mobile game "Valorant," and the 10th anniversary event of "Honor of Kings" to drive growth. The outlook on AI monetization and capital expenditure is positive, with second-quarter capital expenditure decreasing by 30% quarter-on-quarter. UBS indicated that investors should understand this as a short-term impact of GPU import restrictions, and management also stated that it will continue to adopt a diversified chip strategy and improve efficiency
