HSBC Research: Tencent's gaming and advertising business outlook is stable, with a strong start for "Crossfire"

HSBC Research published a report indicating that Tencent (00700.HK) has a consistently strong outlook for its gaming and advertising businesses. The launch of "CrossFire" has been strong, and the risk of market erosion when new versions are released is low. Additionally, progress has been made in artificial intelligence technology in recruitment and organizational restructuring, with a large user base remaining a core competitive advantage.

Furthermore, Tencent will disclose its fourth fiscal quarter results on March 18. The bank expects Tencent's revenue and non-International Financial Reporting Standards (non-IFRS) operating profit to grow by 13% and 16% year-on-year, with domestic market and international gaming business revenue expected to grow by 14% and 25% year-on-year, respectively. Strong performance in PC is likely to drive the gross margin of value-added services to exceed expectations; marketing services revenue is expected to increase by 18%; and financial technology and enterprise services revenue is expected to grow by 9%.

The bank maintains a "Buy" rating on Tencent, with a target price of 770 yuan, and has lowered its non-IFRS net profit forecasts for 2025 to 2027 by 1% to 2%. (ha/)