CICC: Maintaining Tencent Holdings' (00700) “Outperform the Industry” Rating Target Price of HK$666

The Zhitong Finance App learned that CICC released a research report stating that maintaining Tencent Holdings (00700)'s “outperforming the industry” rating and target price of HK$666 corresponds to the 2026 and 2027 non-IFRS price-earnings ratios of 20 times and 19 times, respectively, with 68% upside compared to the current stock price. The bank kept the company's 2026 and 2027 revenue and non-IFRS profit forecasts unchanged. On November 4, Tencent Hybrid officially released Hy4. Compared with the Hy4 preview open source on August 28, the scale of pre-training and post-training was expanded, and the domestic and international versions of WorkBuddy were simultaneously connected to HY4. The bank believes that model iteration is only one of the competitive dimensions. The focus of Tencent's strategy is shifting to agent context accumulation, and the superposition advantages of horizontal ecological integration and positive contextual accumulation may be more definitive.

CICC's main views are as follows:

Introducing visual and computer tasks to improve usability in productivity scenarios

On November 4, Tencent Hybrid officially released Hy4, expanding the scale of pre-training and post-training compared to Hy4 Preview, which was open source on August 28. Officials said that Hy4 is among the strongest open source models for the first time, and plans to weight the open source model in the near future. On the same day, the domestic and international versions of WorkBuddy were simultaneously connected to HY4 to launch a two-day limited-time free trial.

Tencent HY4 is at the same parameter level as Preview. The total parameters are 770B, the activation parameter is 49B, and the context is 1M. The API pricing is also consistent, with 6 yuan for input, 18 yuan for output, and 0.3 yuan for cache. The capability upgrade is mainly reflected in: 1) improving the stability of long-range tasks and optimizing the preview version for excessive self-verification and long-link breakpoints; 2) Hy4 can complete tasks such as fine-grained image processing and complex chart analysis after calling the visual understanding superposition tool; 3) being able to operate the computer through a graphical interface and command line to improve the depth of the process in the office scene.

At the same time, Hy4 conducted special training for professional software such as Blender and long-range tasks across applications. Officials acknowledge that there is still a big gap between Hy4 and the top closed source model in the high-difficulty test set, and it is clear that the scale of Hy5 will be further expanded. It is planned to release Hy4 Flash, which focuses on model cost performance and inference speed, and maintain a higher frequency of collaborative iterations with the product in the near future.

Model iteration is only one of the competitive dimensions, and the focus of strategy shifts to agent context accumulation

Buddy One, which was previously released at Tencent's Global Digital Ecosystem Conference, converged the three layers of model, harness, and context capabilities into the same agent portal. WorkBuddy is both a delivery interface and a training data collection terminal. The bank believes that the accumulation or continuation of context affects the following aspects:

1) When the model's ability is equivalent, it affects the success rate of a single task.

2) Influence the quality of Co-Design's feedback and the direction of targeted optimization of the model team. In the WorkBuddy office scenario evaluation, Hy4 scored an average performance score of 83.18, and the task pass rate reached 96.15%. Out of 12 scenarios, 9 ranked first in the country.

3) Increase customer migration costs.

The bank continued the opinion of the previous report, believing that under the premise that there is still a gap between the mixed element series and the top closed source model, horizontal integration on the ecological side provides a lower limit. Buddy One upgraded the entrance to an account system, so that the context began to accumulate positively. The advantages or relative capabilities of the two are more definitive compared to the model's capabilities.

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