Svmuu News: JPMorgan Chase released a report reiterating its “Overweight” rating on Tencent Holdings (00700.HK) and maintaining a target price of HK$690.The firm believes that Tencent remains the highest-quality compound growth stock in China’s internet sector, boasting enduring user engagement, continuously improving gaming and advertising monetization capabilities, strong profit margins and balance sheet strength, as well as AI options with a concrete path to monetization.
The report notes that as Tencent has increased its AI investments and expects depreciation to begin in the second half of this year,the firm has lowered its forecast for Tencent’s non-IFRS earnings per share for fiscal year 2026 by 5% to 28.47 yuan and raised its 2026 capital expenditure forecast to 200 billion yuan.
However, the firm emphasized that these adjustments reflect heavier AI investments and depreciation, rather than a deterioration in Tencent’s existing core businesses.The firm expects second-quarter revenue to grow by approximately 9% year-over-year, with value-added services revenue increasing by 5% to 6%, gaming revenue by 9% to 10%, marketing services revenue by 18% to 19%, and fintech revenue by about 5%, which is broadly in line with market expectations. (Jin Shi)