Goldman Sachs released a research report stating that it maintains a "buy" rating for Tencent (00700) and raises the target price by 4%, from 521 Hong Kong dollars to 542 Hong Kong dollars. Goldman Sachs expects that, despite a challenging macro environment, Tencent remains one of the companies with the most noticeable and sustainable profit growth among China's internet giants.

The report states that although Tencent's future profit margin expansion pace will be more moderate, supported by multiple game titles, WeChat advertising, e-commerce, ai growth drivers, and ongoing cost control, Goldman Sachs currently estimates that Tencent's revenue will grow by 8% and 9% over the next two years, with earnings per share increasing by 41% and 14%, respectively.

Goldman Sachs indicated that after the financial report was released yesterday, it lowered its revenue forecast for Tencent in 2024 by 0.2% to reflect the delay in international games, but this was offset by better advertising revenue growth and the gradual stabilization of future fintech payment values. At the same time, it raised its revenue forecasts for 2025-2026 by 0.9% and 0.8%, respectively, to reflect the improved advertising visibility in the WeChat ecosystem and more back-end international game revenue. Goldman Sachs also raised Tencent's net profit estimates for 2024-2026 by 2-3%, mainly reflecting increased joint venture profits and reduced assumptions for withholdings and overseas business taxes.