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<Research>JPM Reiterates Overweight on TENCENT; 3 Risks Merit Watch
Recommend 21 Positive 30 Negative 13 |
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JP Morgan released a report reiterating its Overweight rating on TENCENT (00700.HK). The broker said TENCENT is a high-quality earnings compounder at trough valuation. The 1Q26 disclosure framework substantially reduced overhang surrounding AI investments, which had previously weighed on its multiples. In 1Q26, consolidated non-IFRS EPS lifted 12% YoY, better than consensus forecasts of 5-8% growth for FY2026. Three risks warranted attention, said the broker. First, capex reached RMB37 billion in 1Q26, implying full-year FY2026 capex of approximately RMB130-150 billion, well above that in 2025. The acceleration in capex may reignite market concerns over AI spending discipline. Second, 1Q26 consolidated growth included one-off tailwinds. Excluding these factors, the gap between underlying growth and market expectations may narrow. Third, the scope of "new AI products" may expand in subsequent quarters, likely diluting the analytical cleanness of the bifurcated disclosure. 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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