BoA Merrill Lynch: raise TENCENT (00700) target price to HKD 690, rated "buy"

Bank of America releases a research report stating that TENCENT (00700) second quarter performance exceeded expectations, with revenue accelerating to a 15% year-on-year increase to 185 billion RMB (3% higher than expected). The gross profit margin of each business expanded, offsetting the cost impact of artificial intelligence. Adjusted operating profit increased by 18% year-on-year to 69 billion RMB (4% higher than expected). The bank raised its target price from 631 HKD to 690 HKD, reaffirming its "buy" rating. The bank has a positive view on the group's business growth and has raised profit forecasts for the years 2025 to 2027 by 2%. In the second half of the year, the bank expects the advertising business to maintain growth rates higher than the industry average, FBS to further recover, game revenue to be supported by Evergreen games, and new game potential to rise, leading to continued growth in operating profit.