Huatai Securities raised Tencent's target price to 759.47 yuan, expecting a 9% increase in adjusted net profit for the third quarter

Huatai Securities' research report points out that it predicts Tencent Holdings (00700.HK)(TCEHY.US) will see a year-on-year revenue growth of 14.1% in the third quarter of 2025, with adjusted net profit attributable to shareholders expected to grow by 9% year-on-year to 65.2 billion RMB (same below). Game revenue in the third quarter is expected to grow by 19% year-on-year, while advertising revenue continues to benefit from AI, with a year-on-year growth rate potentially reaching 20%. Financial technology revenue is expected to recover to a year-on-year growth of 11%.

Huatai Securities stated that important short- to medium-term catalysts for Tencent include: "Delta Action" has surpassed 30 million daily active users (DAU) in September, gradually becoming Tencent's new generation of evergreen shooting games. Huatai Securities estimates that the dual-end revenue in 2026 is expected to reach 12 billion to 18 billion RMB; the advertising business continues to improve its return on investment (ROI) driven by AI, which is expected to support its sustained high growth momentum, with AI Agent products accelerating in launch and iteration.

Looking ahead to 2025 to 2027, Huatai Securities has slightly adjusted its revenue forecasts for Tencent to 755 billion, 851 billion, and 937 billion RMB; adjusted net profit attributable to shareholders is estimated to be 257 billion, 291.7 billion, and 333.6 billion RMB respectively. Based on the SOTP valuation, a target price of 759.47 HKD is given to Tencent (previous value 752.17 HKD), corresponding to a price-to-earnings ratio of 24.8 times for Tencent in 2025, maintaining a "Buy" rating