Goldman Sachs: Maintains a "buy" rating on TENCENT (00700) with a target price raised to 542 Hong Kong dollars.

Goldman Sachs released a research report stating that it maintains a "buy" rating on TENCENT (00700) and has raised its target price by 4% from HK$521 to HK$542. Goldman Sachs predicts that, in a challenging macro environment, Tencent remains one of the most profitable and sustainable companies among Chinese internet giants. The report mentions that despite a more moderate pace of profit margin expansion for Tencent in the future, with the support of multiple games, WeChat advertising, e-commerce, growth in artificial intelligence, and continued cost control, Goldman Sachs currently forecasts revenue growth of 8% and 9% for Tencent in the next two years, with EPS growth of 41% and 14% respectively. Goldman Sachs stated that after the financial report was released yesterday, Tencent's revenue forecast for 2024 was lowered by 0.2% to reflect the delay in international game launches, but this was offset by better advertising revenue growth from CKH HOLDINGS' future financial technology payment value. At the same time, revenue forecasts for 2025-2026 were raised by 0.9% and 0.8% respectively to reflect increased visibility in the WeChat ecosystem and more back-end international game revenue. Goldman Sachs also raised Tencent's net profit forecasts for 2024-2026 by 2-3%, mainly due to increased equity income and lower assumptions for provisions for taxes and overseas business taxes.