CICC: Maintains Tencent Holdings "Outperform" rating with a target price of HKD 700

According to the Zhitong Finance APP, China International Capital Corporation (CICC) has released a research report stating that it maintains its revenue and profit forecasts for Tencent Holdings (00700) for 2025/2026. It maintains an "outperform industry" rating and a target price of HKD 700, corresponding to 23x/20x 2025e/2026e Non-IFRS P/E, which has an 8.5% upside potential compared to the current stock price. Currently trading at 21.2x/18.4x 2025e/2026e Non-IFRS P/E. On September 16, the 2025 Tencent Global Digital Ecosystem Conference was held in Shenzhen, where several AI technologies and product updates were announced, and Tencent announced the full opening of its AI implementation capabilities and advantageous scenarios to accelerate the deployment of "user-friendly AI."

CICC's main points are as follows:

Basic models continue to evolve, domestic computing power accelerates adaptation

Tencent recently released the Hongyuan 3D 3.0 base model, which improves modeling accuracy by three times and supports 3.6 billion voxel ultra-high-definition modeling. Based on its developed 3D AI workstation Hongyuan 3D Studio, it can be widely applied in game development, animation production, industrial design, and other scenarios. At the same time, Tencent stated that it will fully adapt to domestic chips and will integrate different types of chips through the software capabilities of its heterogeneous computing platform to provide high-cost-performance AI computing power services externally. The firm believes that Tencent is rapidly iterating in the model field, establishing differentiated advantages based on its own scenarios among many model manufacturers (such as Tencent's expertise in the gaming field); from the perspective of computing power, Tencent has various computing power consumption scenarios, including model training, internal workflow usage, and external ToB/ToC service inference. Currently, Tencent is adapting domestic chips, which is conducive to further accumulating experience in domestic substitution in computing power and promoting its process.

Tencent's B/C-end application ecosystem continues to expand, creating "user-friendly AI"

On the C-end, Tencent's Yuanbao ranks among the top three in DAU for domestic AI-native applications; the number of files in the IMA knowledge base has exceeded 100 million. On the B-end, the user base of Tencent Meeting's AI features has increased by 150% in the past year; the AI programming tool CodeBuddy supports 50% of the new code generation within Tencent, reducing coding time by 40% and improving R&D efficiency by over 16%, with significant internal efficiency improvements. It can be seen that Tencent's B/C-end is firmly grasping the most genuine needs of customers and gradually advancing implementation, especially on the C-end. The firm judges that Tencent may have an advantage based on its past accumulation of understanding C-end products and its strong social ecosystem. In addition, Tencent Cloud's AIAgent-related developments are also progressing—Tencent Cloud's intelligent agent development platform has been upgraded to version 3.0, supporting various intelligent agent development frameworks and releasing a panoramic strategy for intelligent agents. The firm believes that this move can empower Tencent's own agent development and consolidate its ecological partners.

Risk Warning: Macroeconomic uncertainty; regulatory factors; costs or expense ratios higher than expected