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2026-03-20 11:24:32 TENCENT (00700.HK) delivered a solid 4Q25 results, with international game and cloud business being notable highlights that exceed market expectations, Daiwa released a research report saying. The cross-segment gross profit expansion was another highlight, boosting the Group's overall gross profit margin to 56%, reflecting improved business mix and operating leverage, despite increased AI investments and expenditures during the period. TENCENT significantly increased its AI investment in 4Q25, with total operating and capital expenditures reaching RMB20 billion, up 51% QoQ, the report noted. Importantly, AI has begun to strengthen TENCENT's core businesses, including game, advertising, cloud and fintech, by enhancing user engagement, monetization capabilities and expanding gross profit, thus supporting short-term earnings. Due to higher gross profit margin, Daiwa raised its 2026/ 2027 EPS forecasts for TENCENT by 4%, with rating reiterated at Buy and keeping its target price at $725, equivalent to a projected 2026 PE ratio of 20.1x. ~ AASTOCKS Financial News Website: www.aastocks.com | |