Daiwai Securities lowered Tencent target price, cut earnings forecast

 

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Daiwa Securities cut the target price for Tencent’s stock to HK$450 from HK$480, reiterating a Buy rating. The broker slashed the forecast of Tencent’s 2022 – 2024 revenue and earnings by 2% – 3% and 2% – 8%, respectively.

Daiwa said that the valuation of Tencent’s stocks was still compelling, given the monetization potential of Video Accounts and game titles.

Video Accounts, a short video feed feature in WeChat, has been demonstrating accelerated monetization pace and is expected to generate meaningful revenue contribution from late 2023, powered by user growth and increased user engagement, it said.

Macroeconomic recovery and the launch of new game titles will become share price catalysts in the near term, it said.

Tencent’s total revenue in the second quarter was forecast to contract 4.7% year over year to 131.8 billion yuan and its non-GAAP net profit was predicted to be 22 billion yuan, primarily dragged down by the softened advertising sentiment, Daiwa said.