Citigroup reiterates "buy" rating on TENCENT (00700) with a lowered target price of HKD 563.

Citigroup's research report stated that Tencent (00700) will announce its fourth quarter performance for 2024 on March 19th, and the consensus forecast for Tencent's fourth quarter revenue last year has been adjusted closer to the expected 8.5% year-on-year growth before the adjustment. The bank reiterated its "buy" rating on Tencent, as well as its preferred and core holding status. However, the target price has been reduced from HK$573 to HK$563. Citigroup stated that they conservatively adjusted the revenue forecasts for the group's financial technology and enterprise services, and increased their assumptions for operating costs and operating expenses. They now simulate a 7.3% year-on-year increase in total revenue for the fourth quarter of 2024, as well as a 16% increase in adjusted operating profit and a 25% increase in net profit. Looking ahead to 2025, despite Tencent's fundamental factors remaining strong, gross profit, operating profit, and net profit continue to grow at a rate higher than revenue. To demonstrate confidence in its fundamentals, Tencent has repurchased approximately 16 million shares at a total cost of HK$6 billion from January 7th to 10th, at a rate of HK$1.5 billion per day.