Jinwu Financial News | Zhongyin International Research Reports pointed out that TENCENT (00700) announced its 1Q25 results: total revenue grew by 13% year-on-year, reaching 180 billion yuan, which is 3% higher than Bloomberg's consensus expectation, mainly due to strong growth in game/marketing revenue (up 24%/20% year-on-year respectively); non-IFRS Net income increased by 22% year-on-year, reaching 61.3 billion yuan, 3% higher than the consensus expectation, mainly benefiting from good revenue performance and better-than-expected gross margin improvement (an increase of 3.2 percentage points year-on-year).
Driven by the increase in the proportion of high gross margin business revenue and cost efficiency optimization, the company's gross margin continues to improve. Based on this, the bank raised its FY25-27 non-IFRS earnings forecast by 3%-7%, and adjusted the SOTP-based Target Price to HKD 660.0 (previous value: HKD 625.0). The bank is Bullish on TENCENT's AI development prospects, expecting AI to continue supporting growth across its various Business lines. Maintain "Buy" rating.
