Daiwa Capital Markets: Tencent's second-quarter performance is strong, target price raised to HKD 736

Daiwa Capital Markets released a research report stating that Tencent's performance in the second quarter of this year exceeded expectations, with revenue increasing by 14.5% year-on-year to RMB 184.5 billion, which is 3% higher than the bank's and market consensus expectations. The gross margin expanded by 3.6 percentage points year-on-year to 56.9%, surpassing market expectations. The bank maintains a "Buy" rating on Tencent and raised the target price from HKD 650 to HKD 736, implying a forecasted price-to-earnings ratio of 22 times for 2026. The bank also raised its revenue forecasts for Tencent for the third quarter of 2025 and 2025 by 3% and 1%, respectively, representing year-on-year revenue growth of 11.6% and 12.6%. Additionally, the bank raised its forecast for Tencent's non-International Financial Reporting Standards net profit for the third quarter of 2025 by 3%, but kept the 2025 forecast unchanged, implying year-on-year growth of 8% and 12% for the third quarter of 2025 and 2025, respectively, as well as net profit margins of 34.5% and 34%