EB SECURITIES: Maintains "Buy" rating on TENCENT (00700) with a target price of HK$430.

EB SECURITIES released a research report stating that the TENCENT (00700) "buy" rating is maintained with a target price of 430 Hong Kong dollars. Considerations: 1) The activation of the full-domain traffic value of WeChat Mini Stores. With the shopping and social needs brought by subsequent festivals such as the Spring Festival, it is expected that the GMV level will further increase. 2) WeChat has been removed from the list, combined with Tencent's daily repurchase of 1.5 billion Hong Kong dollars since January 8, 2025, which is expected to provide long-term support for the stock price. Maintaining the company's Non-IFRS attributable net profit forecast for 2024-2026 at 225.58/254.39/276.16 billion yuan respectively. Event: On January 9th, Tencent held the 2025 WeChat Open Class PRO event, which included a WeChat Mini Store session, a mini-game session, and an enterprise WeChat industrial session, among others. It showcased the trend of diversified development of the WeChat ecosystem in various fields: rapid and diversified growth of mini-game users, improved monetization capabilities, multi-scenario user engagement; Video accounts emphasized the value of quality live content again; the rapid growth of WeChat Mini Store business, clear user profiles, and continuous innovation and integration of functions; Enterprise WeChat offers a variety of intelligent tools to support the digital transformation of the manufacturing industry and help companies expand globally. EB SECURITIES' main points are as follows: The open class demonstrates the potential of further expanding and monetizing the WeChat ecosystem. The combination of mini-programs, mini-stores, and service accounts with the gifting function is expected to promote e-commerce development. The growth of mini-games is still rapid and is expected to leverage WeChat traffic and IP value to achieve win-win results. This open class focused on: 1) Comprehensive expansion of WeChat Mini Stores, helping businesses move from single to full-domain operations, enhancing the operability of WeChat e-commerce, expanding user touchpoints, and thereby raising prospects for GMV growth. WeChat Mini Stores saw rapid growth in GMV in 2024, reaching 1.92 times that of 2023, with a 2.25 times increase in the number of orders and a 1.5 times increase in GPM (average order amount per thousand users). WeChat Mini Stores work closely with the WeChat product ecosystem, including mini-programs and official accounts, to enhance marketing opportunities and efficiency in multiple scenarios: WeChat Mini Stores serve as a platform for transactions, mini-programs handle member operations, expand private domains, and enhance user stickiness, while official accounts are used to retain fans and notify users. The launch of the gifting feature triggers social marketing opportunities, and is expected to be combined with Wuxi Online Offline Communication Information Technology Co., Ltd. stores and live shopping scenes to leverage WeChat's social attributes and bring new e-commerce growth. 2) WeChat Mini Games show continued impressive data, with IAA, IAP payment models becoming more mature, and growth potential in various scenes such as PC end and video accounts. In 2024, the monthly active users of mini-games reached 500 million, with daily active users reaching 100 million, a 10% year-on-year increase; the commercial scale grew by over 20% year-on-year. More than 900 mini-games achieve monetization through the IAA gameplay, contributing over a million revenue and still maintaining fast growth, with the overall scale expected to double within 3 years. IAP-based mini games benefit from WeChat's perfect infrastructure and receive higher computing power, with MMO, SLG, tower defense, and other gameplay modes performing well. Some mini-games benefit from multi-end linkage, with significant growth in PC game duration, payment rates, and ARPU. Video account short video views increased by 170%, and is expected to become a new showcase space for outstanding mini-games. 3) Continuous exploration of monetization potential, as video account shopping influencers are upgraded to WeChat Mini Store influencers. New author traffic continues to tilt, with a 110% increase in the number of high-quality content anchors on video accounts in 2024, a 100% increase in the number of live broadcasts, and a 110% increase in content anchor income. 4) Tencent's AI field layout attracts industry attention, with the launch of the WeChat Cloud AI code assistant. The WeChat Cloud AI code assistant has been used in hundreds of Tencent applications and can also be used for efficient development of mini-programs, further lowering the production threshold of WeChat Mini Programs. Enterprise WeChat fully supports internationalization and intelligence. The newly launched intelligent forms in 2024 have empowered a large number of manufacturing plant factories, with built-in intelligent documents and other efficiency tools helping companies in their global digital transformation. Risk Warning: Regulatory uncertainty risk, macroeconomic risk, risk of new and old game product performance not meeting expectations, intensified competition risk.