BofAS: TENCENT Switches Growth Engine; Rating Buy Kept
Growth Engine Shift:
New Focus: Tencent is expected to shift its growth engine to its game and advertising businesses.
Reason: This shift is aimed to offset the slowdown in its fintech business.
Reason: This shift is aimed to offset the slowdown in its fintech business.
Q2 2024 Projections:
Revenue Forecast: Slightly lowered to RMB 159.5 billion, reflecting a 7% year-over-year (YoY) increase.
Adjusted Net Profit: Raised to a 27% YoY growth, up from the previous estimate of 24%.
Adjusted Net Profit: Raised to a 27% YoY growth, up from the previous estimate of 24%.
Specific Segments:
Advertising Revenue: Anticipated to grow by 16% YoY.
Game Revenue: Expected to see an 8% YoY increase.
Game Revenue: Expected to see an 8% YoY increase.
Rating & Target Price:
Rating: Buy.
Target Price: $480.
BofA Securities remains optimistic about Tencent, predicting that its focus on gaming and advertising will drive growth despite challenges in the fintech sector. The broker maintains a positive outlook with a Buy rating and a target price of $480.
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