Daiwa Cuts Tencent Holdings (00700) Target Price to HK$725, Reiterates "Buy" Rating

Stock News01-21 15:25

Daiwa released a research report indicating that, due to Tencent Holdings' (00700) weak overall revenue performance last quarter, it has lowered its forecast for the group's gaming revenue during the period. It is estimated that revenue from the local games business last quarter was RMB 37.3 billion, a year-on-year increase of 12%, but a quarter-on-quarter decrease of 13%. The firm has lowered its earnings per share forecast for Tencent for 2026-2027 by 1% to 2%, while reiterating its "Buy" rating. However, it has reduced the target price from HK$750 to HK$725. Daiwa reassessed its forecasts for Tencent's performance last quarter, anticipating that the group's domestic games business will slow down due to seasonal factors and a high base effect. Meanwhile, the international games business is expected to stabilize after an unusually strong third quarter. Additionally, costs associated with hiring AI talent and GPU rentals are expected to create upward pressure on operating expenses.

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