腾讯第一季度加速增长

15 May 2025 Robin Zhu+852 2123 2659robin.zhu@bernsteinsg.com Tencent Holdings Ltd Charles Gou+852 2123 2618charles.gou@bernsteinsg.com RatingOutperform Min-Joo Kang+852 2123 2644minjoo.kang@bernsteinsg.com Price Target 700.HK 660.00 HKD(640.00OLD) Charlie Peng+81 3 6777 6993charlie.peng@bernsteinsg.com Tencent Q1: AIcceleration The one where everything beat.Tencent’s Q1 print was a clean beat more or less top-to-bottom. Group revenue of RMB180bn grew 12.9% year on year, and beat our estimateand consensus (both RMB176bn) by just over 2%. Gross profit of RMB100bn grew 19.8%year on year, and implied 320bps of year on year margin expansion. Non-GAAP operatingprofit (RMB69.3bn, +18.3% year on year) was slightly ahead of Bloomberg consensus onRMB67.0bn in spite of higher AI R&D spend. Domestic and international gaming revenuegrew 24% and 23% (22% constant currency) year on year — while Tencent’s currentdeferred revenue balance this quarter was 15.4% higher year on year. Let’s talk AI ROI.Tencent reported RMB23bn of capex this quarter, just under 13% ofgroup revenue. Combined admin and R&D expenses this quarter grew 35.7% year onyear, or 19.6% excluding a RMB4bn one-off. On the incomings side of the ledger, 20.2%Marketing Services revenue growth this quarter was 2-3% ahead of our estimate andconsensus, and implied 270bps of sequential acceleration versus Q4. Managementcomments pointed to Video Accounts ad load remaining flat sequentially in Q1, whileTencent’s ad tech improvements and generative AI platform drove incremental ad spend. Thecompany also talked up AI bots used in livestreaming e-commerce as another driver of highmargin revenues — Video Accounts e-commerce GMV continues to grow very rapidly. Thecompany’s increased focus on search ads growth felt very notable. Tencent’s growth runway is long… and getting longer.Tencent managementcommentary on the analyst call sounded confident, with management pointing to AI gainsin its tent-pole PVP games, in its ads business, and elsewhere. We’re also bullish on AIas a driver of productivity gains in video gaming development. The company was explicitabout its preference for AI to prolong its channel of high growth, rather than necessarilymaximising short-term growth. We generally agree with this approach, and argue that themarket continues to mis-price the durability of Tencent’s growth. On balance our estimatesfor Tencent move up slightly. The stock remains our top long-term pick in the sector. Investment Implications DETAILS A CLEAN Q1 PRINT Tencent’s Q1 2025 results were strong, beating our estimates and Bloomberg consensus more or less from top to bottom.RMB180bn of Q1 revenue was slightly over 2% ahead versus our modelling and consensus. Non-GAAP operating profit (ourpreferred metric for core business momentum) reached RMB69.3bn compared with our RMB68.3bn estimate, and consensuson RMB67.0bn. Our updated price target for Tencent is based on slightly higher earnings estimates multiplied by an unchanged 19x 2026E PEmultiple. The numbers that matter this quarter Gross profit of RMB100bn (which we’ve always argued is a better indicator of Tencent’s “top-line” progress, given the mixof net and gross revenue recognition across the group) grew 19.8% year on year. Total non-GAAP operating expenses grew23.5% year on year, and meant non-GAAP operating profit of RMB69.3bn was 18.3% higher year on year. Compared withRMB58.6bn in Q1 2024, the latter implied a 52.1% incremental margin. Non-GAAP net profit as reported grew 22.0% year onyear, while a 2.4% year on year drop in Tencent’s share count meant non-GAAP EPS grew 25.1%. Tencent’s JV equity incomeline (RMB4.6bn) was roughly inline with we’d modelled ex ante. RMB23bn of capex spend in Q1 2025 was just under 13% ofQ1 revenue, in-line with the company’s guidance. Tencent’s video gaming business had a knock-out quarter in Q1. Strong engagement was already known, but 24% and 23%domestic and international (the latter 22% constant currency) gaming revenue growth But blew street estimates out ofthe water. Of course this reflected prior deferred revenues to some extent. Sensor Tower data pointed to a mid-single digitpercentage increase in mobile billings in Q1, while our discussions with Tencent pointed to much stronger PC gaming revenuetrends (e.g. Path of Exile II, Delta Force). RMB118.2bn of current deferred revenue balance at the end of March was 15.4%higher year on year, and 23.6% higher versus December… which should bode well for Q2 and beyond. Marketing Services revenue reached RMB31.9bn, 20.2% higher year on year. The latter implied 270bpps of sequentialacceleration versus 17.5% growth in Q4, and reflected management commentary pointing to strength in Video Accounts, miniprogram, and search ads. 5.0% FBS revenue growth in Q1 was better sequentially (Q4: 3.2% growth), which the companyattributed to consumer lending and broader non-payment fintech. In our discussions with Tencent, WeChat Pay GPV growthwa