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<Research>CICC: TENCENT 1Q Net Profit In Line; Active and Controllable AI Investment
Recommend 21 Positive 29 Negative 13 |
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TENCENT (00700.HK) reported a 1Q non-IFRS net profit up 11% YoY, in line with market expectations, CICC said in its report. Affected by revenue deferrals, 1Q revenue rose 9% YoY, below market expectations. TENCENT's 1Q game gross receipts recorded promising growth, with evergreen titles notching new highs. As the Spring Festival fell later this year, part of game gross receipts and revenue sharing was deferred to subsequent quarters. The broker expected domestic game revenue to grow 12% YoY in 2Q26 and overseas game revenue to ascend 10% YoY. TENCENT's AI investment was expected to be proactive and manageable. At end-April, TENCENT open-sourced and released the Hunyuan 3.0 preview LLM, balancing practicality and cost-effectiveness. It deployed across 131 internal products to enable collaborative iteration, with plans to evolve toward models with larger parameters. In the future, if mini program code is converted into AI skills, it could build a differentiated ecosystem moat. Excluding the impact of new AI products, 1Q non-IFRS operating profit hiked 17% YoY, indicating resilient profitability in core businesses and providing sufficient cash flow to support AI investment. The broker forecast 2Q26 adjusted operating profit and adjusted net profit to grow 7% and 9% YoY, respectively. CICC maintained its revenue and non-IFRS net profit forecasts for 2026 and 2027. It reiterated an Outperform rating and kept the TP at HKD666. 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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