Nomura: It is expected that Tencent Holdings (00700)'s net profit in the first fiscal quarter will beat the expected market target price of HK$648

The Zhitong Finance App learned that Nomura released a research report saying that the total revenue of Tencent Holdings (00700) in the first quarter of fiscal year 2025 is expected to increase 10% year-on-year to 176 billion yuan (same below), in line with the latest market consensus; it is expected that its non-IFRS (non-IFRS) operating profit will increase 19% to 70 billion yuan year-on-year, higher than market expectations of 4%. Nomura expects Tencent's online advertising revenue to rise 19% year over year, mainly driven by video ads, and its share of revenue may rise to more than 20% of the advertising business. The bank set a target price of Tencent H shares at HK$648, giving it a “buy” rating.

The bank expects Tencent's operating profit margin to increase 2.8 percentage points to 39.6%, mainly supported by continued expansion in gross margin; non-IFRS earnings per share forecast may increase 29% year over year, which is 5% higher than the latest market estimate. Nomura also indicated that Tencent's core business is likely to remain stable, and its online game revenue may increase 15% year over year in the first quarter, benefiting from the steady performance of classic games such as “King's Glory”, “Peace Elite”, and “Wild Brawl”, as well as contributions from newly released games such as “Dungeons and Warriors Mobile Game”.