Guoxin Securities: Maintaining steady growth in Tencent Holdings (00700)'s “superior to the market” rating of the main business

The Zhitong Finance App learned that Guoxin Securities released a research report stating that it maintains Tencent Holdings (00700)'s “superior to the market” rating. Considering the impact of AI investment and amortization, the bank lowered its profit forecast and estimated the company's adjusted net profit for 2026-2028 to be 2685/3081/340.8 billion yuan, respectively (a reduction of -3/-2/ -2%). The company has increased investment in AI talents, etc., to supplement model research and other capabilities. Hybrid 3.0 uses fewer parameters to compete with top open source models at home and abroad. The product side has advantages, and is optimistic about Tencent's overall ecological capabilities.

Guoxin Securities's main views are as follows:

Revenue is expected to increase by 10% in the second quarter, and adjusted net profit to mother will increase by 5%

In 26Q2, the bank expects Tencent to achieve revenue of 202.4 billion yuan, an increase of 10% over the previous year. The overall business is growing steadily. 2026Q2 has an estimated operating profit of 75.7 billion yuan under non-IFRS, an increase of 9% over the previous year. It is estimated that non-IFRS net profit will be 66 billion yuan, an increase of 5% year on year; non-IFRS net profit margin will be 33%, or -1 pct month-on-month. Gross margin is expected to increase by 57%, mainly due to the development of high-margin businesses such as video accounts, e-commerce commissions, and Evergreen Gaming. The cost side is expected to increase 21% year over year due to the impact of Capex amortization, AI application investment, etc. Among them, the estimated management fee rate (including R&D) is 19%, an increase of 2 pct over the previous year. Mixture 3.0 is progressing well, and has the ability to make close to top open source models with a lower number of parameters. The total number of parameters in the Tencent 3.0 model is 295B, the activation parameter is 21B, and the context length is 256K. The mixed element 3.0 model focuses on improving the quality of post-training.

Gaming: Steady growth, overseas games affected by the base

In 26Q2, the bank expects the company's online game business revenue to be 65.8 billion yuan, an increase of 11% over the previous year. Domestic game revenue is expected to increase 12% year over year. “Rock Kingdom” mobile game revenue is gradually reflected, and “King's Glory World” adopts a long-term operation strategy and continues to iterate and optimize. Wang Zhe IP has a huge user base and significant potential, but MOBA players have poor expectations for open world RPG gameplay, and adjustments have been made based on user feedback since the product was launched. Overseas, the year-on-year increase is expected to be 10%. The overseas casual game category experienced explosive growth in May 2025, leading to a significant increase in comparison base over the same period this year; Supercell also had some base pressure. Other than that, the contribution of short-term new tours is limited.

Marketing Services: Revenue is expected to increase by 18%

In 26Q2, the bank expected Tencent's marketing service revenue to be 42.2 billion yuan, an increase of 18% over the previous year. The core of growth comes from the sharp rise in the volume and price of video accounts, combined with multi-site commercialization and collaborative expansion of the WeChat ecosystem such as Search and Mini Programs. In addition to this, the improvement in full-link delivery efficiency driven by the mixed-element large model is expected to further feed back the growth of the advertising business.

Fintech and corporate services: 10% year-on-year increase

2026Q2. The bank expects fintech and corporate services revenue of 61.1 billion yuan, an increase of 10% over the previous year. Tencent's financial technology market was dismantled, and the main revenue came from the payment business. The payment business is related to the offline consumer market, and the bank is expected to be affected at the macro level. According to the monetary authority balance sheet issued by the central bank, non-financial institution deposits (customer reserve deposits deposited by payment institutions with the central bank) increased by 4%/+3% year-on-year in April/May. In terms of corporate services, the bank expects 26Q2 revenue to increase 23% year-on-year due to e-commerce commissions and cloud business growth. Tencent leverages its product and ecological advantages, and Workbuddy has become the Chinese office intelligence platform with the highest number of people in China. Workbuddy lowers the threshold of use, adapts to ordinary workers, and has a built-in 20+ skill package (data processing, billing, competition, public opinion, sales insight, etc.) and other models other than mixed elements (Deepseek, Smart Spectrum, Kimi, Minimax, etc.) to bind WeChat, corporate WeChat, QQ, Flybook, DingTalk, etc. According to Yigan, Workbuddy PC had 8.85 million monthly visits in March, leading the second place (Byte Trae.cn) 2.6 times.

Risk Alerts

Policy risks; the risk of intense competition in the advertising industry; the risk of new games not being launched as scheduled, etc.