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<Research>Daiwa Cuts TENCENT TP to HKD700, Reiterates Buy
Recommend 28 Positive 35 Negative 33 |
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TENCENT (00700.HK) reported 1Q26 revenue growth of 9% YoY, slightly below market expectations, owing to timing noise in game revenue recognition, Daiwa said in a research report. Non-IFRS adjusted net profit added 11% YoY, in line, backed by resilient margins despite a visible step-up in AI spending. While it is still premature to discuss the monetization timeline of AI, the broker has turned more positive on TENCENT's willingness and capability to invest aggressively in AI. The company has reorganized its AI teams with a clearer ecosystem roadmap; coupled with improving domestic chip supply, this reinforces an investment-first, payoff-later strategy. Daiwa slightly lowered its EPS forecasts for 2026-28 by 2-4% to reflect higher projected AI investment. It reiterated a Buy rating and cut its 12-month TP from HKD710 to HKD700. Downside risks include weaker-than-expected game and advertising sales, as well as higher-than-expected AI spending. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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