CICC keeps Tencent target price unchanged, with outperforming rating, citing stronger recovery momentum in games, AI potential

 

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Tencent’s mainland Chinese games demonstrated a stronger recovery momentum in the first quarter of 2023, with user spending on multiple heavyweight titles hitting record highs, said CICC in a research note.

Internally, the tech giant has attached great importance to AI, on the assumption that AI will become a multiplier for business development, and the company is also planning to commit to more long-term investments in the field of AI, the bank said. 

Apart from the transformative potential of AI foundation models, other upcoming potential growth catalysts include Video Accounts, overseas game titles, SaaS ecosystem led by Tencent Meeting, Enterprise WeChat and Tencent Docs, and fintech business, etc., the report said.

CICC maintained the earnings forecasts on Tencent largely unchanged, and kept the target price at HK$475, with Outperform rating.