Glonghui, May 16 | BOC International released a report raising Tencent's target price from HK$395 to HK$457, maintaining a “buy” investment rating. According to the bank, Tencent's revenue for the first fiscal quarter was 159.5 billion yuan, up 6% and 3% year-on-year respectively, in line with the bank's and market expectations. The gross margin/adjusted operating margin was 53%/37%, optimized over the same period last year. Adjusted net profit increased 54% year over year, thanks to the increase in revenue share of high-margin businesses such as WeChat search ads, mini games, etc., as well as cost optimization for long movies and cloud businesses. Looking ahead to the second quarter of 2024, BOC International said that considering the launch of new local games, such as “Dungeons and Warriors” (May 21) and “Wang Zhe Rongyao,” various old games will resume growth. At the same time, deferred revenue for the first quarter increased 23% month-on-month, and game revenue growth is expected to accelerate. The bank expects gross profit to increase by 17% in the second quarter, continuing to be driven by an increase in the share of revenue from high-margin businesses. Management guided the annual promotion expenses to increase by more than 10%, and annual profit growth was faster than expected revenue. BOC International expects Tencent's 2024/25 revenue growth by 8.2%/7.8%, raise gross profit forecast by 7%/6%, and increase adjusted net profit forecast by 6%/7%.