Yamato: Lower Tencent (00700) target price to HKD 725, reiterate "buy" rating.

Daiwa released a research report stating that due to TENCENT (00700) having a weak overall revenue performance last quarter, they have lowered the group's forecast for gaming revenue for the period, expecting last quarter's local gaming business revenue to be 37.3 billion yuan, a year-on-year increase of 12%, but a quarterly decrease of 13%. The bank has also lowered Tencent's earnings forecast per share for 2026 to 2027 by 1-2%, while reiterating its "buy" rating and lowering the target price from 750 Hong Kong dollars to 725 Hong Kong dollars. Daiwa has reevaluated its forecast for Tencent's performance last quarter, expecting the group's domestic gaming business to slow down due to seasonal factors and the high base effect, while the international gaming business is stabilizing after a strong performance in the third quarter. Additionally, hiring AI talent and GPU leasing costs will add upward pressure to operating expenses.