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<Research>Citi Lifts TENCENT TP to $681; Mgmt Confident Profit Growth Will Outpace Rev.
Recommend 20 Positive 35 Negative 13 |
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Citi’s report highlighted that Tencent achieved double-digit revenue growth in 4Q24, with an 11% YoY increment. Gross profit, operating profit, and net profit advanced 17%, 21%, and 30% YoY, respectively, on the back of strong performance in online advertising and domestic games revenues, mix of faster growth of higher margins revenues and operating leverage. Tencent’s 2024 capex reached RMB76.8 billion, accounting for 12% of revenue, with management expecting the capex-to-revenue ratio to remain in the low double digits this year, Citi said. The broker added that management clearly outlined how AI enhances internal products, such as ad targeting and content creation, and provided a rationale for deploying both internal and external models simultaneously, along with a roadmap for enterprise and consumer AI products. As GPU processor constraints ease with increased capex, cloud revenue growth could accelerate. Robust revenue growth and user engagement continue to bolster the games business. Management expressed confidence in maintaining profit growth outpacing revenue growth factoring in higher depreciation expenses. Citi reiterated its Buy rating on Tencent, raising the target price from HKD648 to HKD681. AAStocks Financial News |
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