Dahua Jixian: Maintains a "buy" rating on TENCENT (00700) with a target price of HKD 570.

Dahua Jixian released a research report stating that it maintains a "buy" rating for TENCENT(00700), and roughly maintains its fourth quarter and full-year revenue forecast for Tencent, with year-on-year growth of 8% and 8.5% respectively. At the same time, the forecast for non-IFRS net profit for the fourth quarter and full year has been raised by 6% and 2% respectively, which represents a year-on-year growth of 30% and 28%. The net profit margin is expected to be 32% and 31%, with a target price of 570 Hong Kong dollars. The report states that Tencent's third-quarter profit exceeded expectations. Revenue grew by 8% to 167.2 billion RMB, in line with market expectations. Gross profit margin increased by 4 percentage points year-on-year to 53.1%, also in line with market expectations. Non-IFRS operating profit increased by 18.6% year-on-year to 61.3 billion RMB, and the Non-IFRS operating profit margin expanded by 3.2 percentage points to 36.6% due to the positive shift in revenue mix. Non-IFRS diluted earnings per share increased by 36% year-on-year, exceeding market expectations by 10%. The bank believes that Tencent's gaming prospects for next year are strong, as deferred revenue in the third quarter of this year increased by 24% year-on-year to 106.6 billion RMB, indicating a good momentum for growth in the fourth quarter and the first quarter of next year.