Citi: Tencent's (00700) WeChat "Xiaowei" is expected to become China's ultimate consumer AI agent; maintain "Buy" rating.

Citi released a research report reiterating its "Buy" rating on TENCENT (00700) with a target price of HK$765. The bank believes that WeChat's "Xiaowei" is uniquely positioned to become China's ultimate consumer AI agent. Rather than launching a standalone app, Tencent has natively embedded "Xiaowei" into WeChat, directly leveraging its massive monthly active user base, proprietary social graph, and the already established and proven mini-program e-commerce infrastructure. The bank noted that compared to Meta assembling third-party connectors, and domestic peers such as BABA-W (09988) and ByteDance potentially facing greater API resistance under China's "walled gardens," WeChat's relatively neutral platform positioning and established vertical partnerships are expected to provide an unparalleled distribution and transaction moat. Similar to Meta's Muse, the bank believes that as agentic commerce takes off in China, "Xiaowei" could unlock significant long-term monetization opportunities through transaction commissions and advertising. The bank stated that Tencent has been testing "Xiaowei" agent capabilities with select business partners since June, and over the long term is expected to connect with a broader ecosystem of partners, autonomously executing more complex user flows and transaction actions within WeChat.