CLSA has released a research report forecasting that Tencent Holdings (00700) will achieve total revenue and adjusted EBIT of 202 billion yuan and 75.6 billion yuan in the second quarter, representing year-on-year increases of 9.7% and 9.1%, respectively, with relatively stable margins.
Driven by new games such as Delta Force, Valorant Mobile, and Rock Kingdom: World, online gaming is expected to regain double-digit growth of 10% year-on-year, though growth in evergreen games is slowing. Online advertising revenue should continue to see approximately 20% year-on-year growth, while commercial services revenue, boosted by AI, could accelerate to 20% year-on-year. CLSA maintains a "Conviction Buy" rating with an unchanged target price of 740 Hong Kong dollars.
CLSA expects domestic gaming revenue to return to double-digit growth in the second quarter, with a projected year-on-year increase of 10% to 44.4 billion yuan, primarily supported by the strong performance of Delta Force and new titles Valorant Mobile and Rock Kingdom: World. Domestic gaming revenue will also benefit from deferred revenue generated by the robust performance during the Lunar New Year holiday in the first quarter of 2026. However, several evergreen games have shown a notable slowdown in the second quarter.
The brokerage forecasts that international gaming revenue will grow 9.8% year-on-year to 20.6 billion yuan in the second quarter. It also estimates that fintech and commercial services revenue will increase 9% year-on-year to 60.6 billion yuan in the second quarter, driven by accelerated growth in cloud services and enterprise SaaS, partially offset by a slowdown in payment business growth. Commercial services revenue should grow more than 20% year-on-year, fueled by increased adoption of small stores, improved SaaS monetization, strong demand for AI inference, and price increases. Tencent's Hy3 has become one of the top three models on OpenRouter, while WorkBuddy is the most widely used office agent on PCs in China.
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