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2026-08-14 14:44:50 CMSI released a research report on TENCENT (00700.HK)'s 2Q26 results, which slightly beat, with growth in domestic gaming and advertising businesses exceeding forecasts. Excluding investment in new AI products, operating profit rose 19% YoY, while the quality of earnings from its core businesses continued to improve. Meanwhile, TENCENT clarified four major AI strategies, supporting more aggressive capex expansion. The broker noted that AI-enabled earnings release from core businesses provides support for AI investment, and it remained positive on TENCENT's AI products and ecosystem moat. It maintained the Overweight rating and lowered the TP from HKD632 to HKD620. The broker raised its forecasts for TENCENT's capex in 2026 and 2027 to RMB215.7 billion and RMB260 billion, respectively. Owing to rising depreciation expenses, it lowered the company's core net profit forecasts for 2026-28 by 5-9%, and projected core net profit growth of 2% and 3% for 2026 and 2027, respectively. The broker believed that increased capex will wreak certain financial pressure to TENCENT in the short term, but this can be alleviated through improving profit of its core businesses, while AI investments also have clear downside protection. ~ AASTOCKS Financial News Website: www.aastocks.com | |