UBS: Reiterates that Tencent Holdings (00700) is the industry's preferred target price increase to HK$720

The Zhitong Finance App learned that UBS released a research report saying that Tencent Holdings (00700)'s second-quarter results fully exceeded expectations. Revenue increased 15% year over year, 3% higher than market expectations, and adjusted operating profit rose 18% year on year, exceeding expectations by 5%, mainly due to the expansion of gross margin. The online gaming and advertising business performed well during the period, and UBS believes it can provide some visibility into revenue in the second half of the year. UBS reiterated that Tencent was the industry's first choice, raised its target price from HK$710 to HK$720, maintained a “buy” rating, and raised its earnings forecast per share from 2025 to 2027 by 3% to 4%.

Looking ahead to the second half of the year, UBS expects the launch of the “Operation Delta” PC version, “Valorant” mobile game, and “Wang Zhe Rongyao” 10th anniversary campaign to drive growth. Views on AI monetization and capital expenditure will be reduced by 30% quarterly. According to UBS, investors should understand the short-term impact of GPU import restrictions, and management also indicated that it will continue to adopt diversified chip strategies and improve efficiency.