Broker Name: China Galaxy International Securities (CGSI)
Date of Report: October 17, 2025
Excerpt from China Galaxy International Securities (CGSI) report.
Report Summary
- Tencent is expected to report strong 3Q25 results, with projected YoY revenue growth of 13.6% and adjusted net profit growth of 16.8%, driven by robust gaming and advertising businesses as well as margin expansion.
- AI technology is fueling Tencent’s revenue growth and operational efficiency, with significant AI-related capex projected (Rmb100bn for FY25F) and strong performance in both gaming (notably new launches like “Delta Force” and “Valorant: Source Surge”) and advertising (benefiting from AI-powered ad-tech and closed-loop WeChat ecosystem).
- Tencent’s cloud division is expanding globally, with key investments in new data centers and technical support centers, despite some capex delays due to AI chip export restrictions.
- Tencent’s Hunyuan Image 3.0 model ranked first among 26 global text-to-image AI models, showing the company’s AI leadership.
- The report reiterates an “Add” rating with a higher DCF-based target price of HK\$728, citing large growth potential across business units empowered by AI over the next 3-5 years. Risks include high AI capex and macroeconomic uncertainties.
- Financial forecasts show continued growth: revenue is expected to rise to Rmb749.6bn in 2025, with normalized EPS and ROE remaining strong. Dividend yield and net cash per share are also rising, with robust operating margins expected to continue.
- Tencent remains a leader among its peers, with high market capitalization, positive ratings, and upward-adjusted earnings estimates.
Above is an excerpt from a report by China Galaxy International Securities (CGSI). Clients of China Galaxy International Securities (CGSI) can be the first to access the full report from the China Galaxy International Securities (CGSI) website: https://www.chinastock.com.hk
