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Tencent Holdings Limited (HK:0700)
:0700
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Tencent Holdings (0700) AI Stock Analysis

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HK:0700

Tencent Holdings

(OTC:0700)

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Outperform 78 (OpenAI - 4o)
Rating:78Outperform
Price Target:
HK$754.00
▲(17.35% Upside)
Tencent Holdings' strong financial performance and positive earnings call are major strengths, reflecting robust growth and profitability. Technical indicators suggest strong momentum, though caution is advised due to overbought signals. The valuation appears high, which could limit upside potential.
Positive Factors
Negative Factors

Tencent Holdings (0700) vs. iShares MSCI Hong Kong ETF (EWH)

Tencent Holdings Business Overview & Revenue Model

Company DescriptionTencent Holdings Limited, an investment holding company, provides value-added services (VAS) and Online advertising services in Mainland China and internationally. The company operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. It offers online games and social network services; FinTech and cloud services, and online advertising services. The company is also involved in the production, investment, and distribution of films and television programs for third parties, as well as copyrights licensing, merchandise sales, and other activities. n addition, it develops software; develops and operates online games; and provides information technology, information system integration, asset management, online literature, and online music entertainment services. Tencent Holdings Limited company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.
How the Company Makes MoneyTencent makes money through several key revenue streams: social network services, online advertising, fintech and business services, and online gaming. The company generates significant revenue from its dominant messaging platforms WeChat and QQ through advertising and value-added services. Online gaming is a major contributor to Tencent's revenue, with income derived from both domestic and international markets through game sales, in-game purchases, and licensing. Additionally, Tencent has a growing fintech sector with its WeChat Pay and QQ Wallet services, earning transaction fees and financial services income. The company's cloud services and other tech solutions also contribute to its earnings, alongside strategic investments and partnerships in various industries, including entertainment, e-commerce, and artificial intelligence.

Tencent Holdings Earnings Call Summary

Earnings Call Date:Aug 13, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong revenue growth and profitability, driven by successful integration of AI across segments and robust performance in gaming and marketing services. However, increased expenses in R&D and other financial losses slightly tempered the enthusiasm.
Q2-2025 Updates
Positive Updates
Revenue and Profit Growth
Total revenue for Q2 2025 was RMB 185 billion, up 15% year-on-year. Gross profit was RMB 105 billion, up 22% year-on-year. Non-IFRS operating profit was RMB 69 billion, up 18% year-on-year.
Games Segment Performance
Domestic games revenue grew by 17% year-on-year, driven by titles like Delta Force and Honour of Kings. International games revenue increased by 35% year-on-year.
Marketing Services Growth
Marketing services revenue grew 20% year-on-year to RMB 36 billion, benefiting from AI-powered adtech upgrades.
FinTech and Business Services
Revenue was RMB 56 billion, up 10% year-on-year, with improvements in commercial payment services and consumer loan services.
AI Integration
AI is becoming an increasingly important driver across various segments, improving game content, marketing efficiency, and more.
Negative Updates
Operating Expenses
R&D expenses rose by 17% year-on-year to RMB 20.3 billion due to higher staff costs and increased investment in AI applications.
Other Losses
Other loss was RMB 3.6 billion compared to a gain of RMB 1.5 billion in the same period last year, mainly due to lower subsidies and tax rebates.
Interest and Finance Costs
Finance costs were RMB 3.9 billion, up 27% year-on-year due to higher interest expenses and increased foreign exchange losses.
Long-form Video Subscription Decline
Long-form video subscription revenue decreased 2% year-on-year, with video subscribers declining 3% year-on-year to 114 million.
Company Guidance
During Tencent's 2025 Second Quarter Results Announcement Webinar, significant growth metrics were highlighted. Total revenue increased by 15% year-on-year to RMB 185 billion, with gross profit up by 22% year-on-year to RMB 105 billion. The non-IFRS operating profit rose by 18% to RMB 69 billion, and the non-IFRS net profit attributable to equity holders increased by 10% to RMB 63 billion. These financial results were driven by strong performance in gaming, with domestic games revenue growing by 17% and international games revenue rising by 35% year-on-year. Communication platforms like Weixin and WeChat reported a combined MAU of 1.4 billion. Marketing services revenue also saw a 20% year-on-year increase, supported by AI-driven adtech upgrades. FinTech and Business Services revenue grew by 10% year-on-year to RMB 56 billion. Tencent's investment in AI was noted as a key driver of growth, contributing to the enhancements in games, marketing services, and cloud services.

Tencent Holdings Financial Statement Overview

Summary
Tencent Holdings demonstrates strong profitability with a robust gross profit margin and efficient operations. The balance sheet is solid with low leverage, and cash flows are stable despite a slight decline in free cash flow growth.
Income Statement
85
Very Positive
Tencent Holdings demonstrates strong profitability with a robust gross profit margin of 53.7% and a net profit margin of 29.4% for the TTM. The revenue growth rate from the previous year to TTM is 3.1%, indicating steady growth. The EBIT margin of 31.3% and EBITDA margin of 36.2% reflect efficient operations and cost management.
Balance Sheet
80
Positive
The balance sheet is solid with a debt-to-equity ratio of 0.39, indicating a conservative leverage approach. ROE stands at 19.2%, showcasing effective use of equity to generate profits. An equity ratio of 54.2% highlights a strong equity base, contributing to financial stability.
Cash Flow
78
Positive
Cash flow analysis reveals a stable financial position with a free cash flow to net income ratio of 0.89, reflecting efficient cash generation relative to earnings. The operating cash flow to net income ratio is 1.31, indicating strong operational cash generation. However, the free cash flow growth rate shows a slight decline of 1.8% from the previous year.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue704.16B660.26B609.01B554.55B560.12B482.06B
Gross Profit384.99B349.25B293.11B238.75B245.94B221.53B
EBITDA256.00B310.14B183.94B134.30B313.65B238.25B
Net Income208.00B194.07B115.22B188.24B224.82B159.85B
Balance Sheet
Total Assets2.01T1.78T1.58T1.58T1.61T1.33T
Cash, Cash Equivalents and Short-Term Investments380.44B343.16B379.15B289.48B262.35B227.88B
Total Debt412.49B357.94B371.24B359.14B323.48B262.46B
Total Liabilities810.46B727.10B703.57B795.27B735.67B555.38B
Stockholders Equity1.11T973.55B808.59B721.39B806.30B703.98B
Cash Flow
Free Cash Flow173.56B181.76B174.56B95.24B113.02B127.52B
Operating Cash Flow283.33B258.52B221.96B146.09B175.19B194.12B
Investing Cash Flow-149.15B-122.19B-125.16B-104.87B-178.55B-181.96B
Financing Cash Flow-106.82B-176.49B-82.57B-59.95B21.62B13.65B

Tencent Holdings Technical Analysis

Technical Analysis Sentiment
Positive
Last Price642.50
Price Trends
50DMA
581.59
Positive
100DMA
543.75
Positive
200DMA
494.05
Positive
Market Momentum
MACD
19.33
Negative
RSI
65.09
Neutral
STOCH
70.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0700, the sentiment is Positive. The current price of 642.5 is above the 20-day moving average (MA) of 620.05, above the 50-day MA of 581.59, and above the 200-day MA of 494.05, indicating a bullish trend. The MACD of 19.33 indicates Negative momentum. The RSI at 65.09 is Neutral, neither overbought nor oversold. The STOCH value of 70.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0700.

Tencent Holdings Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
327.38B18.6424.73%10.72%17.05%
78
Outperform
$6.01T26.9721.04%0.70%11.41%39.10%
77
Outperform
361.65B12.4010.13%-1.69%42.04%
71
Outperform
23.84B9.068.64%6.59%0.99%14.41%
60
Neutral
43.41B300.99-1.14%-10.26%-85.75%
56
Neutral
9.95B118.702.01%3.82%-7.61%-90.51%
60
Neutral
$48.67B4.58-11.27%4.14%2.83%-41.78%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HK:0700
Tencent Holdings
642.50
258.26
67.21%
CHLLF
China Literature
5.58
2.44
77.71%
HK:9888
Baidu, Inc. Class A
131.50
46.85
55.35%
HK:9898
Weibo Corp Class A
97.60
43.80
81.41%
HK:1024
Kuaishou Technology Class B
75.80
35.07
86.10%
HK:1896
Maoyan Entertainment
8.56
2.79
48.35%

Tencent Holdings Corporate Events

Tencent Grants Share Awards to Boost Employee Retention
Aug 14, 2025

Tencent Holdings announced the grant of 23,935,991 Awarded Shares to Employee Participants under its Share Award Scheme, representing approximately 0.261% of the total shares in issue. The awards, which do not require shareholder approval, are intended to incentivize and retain employees, with a vesting period ranging from 12 to 48 months. This move is aimed at encouraging continuous contribution to the company’s operations and long-term growth, reflecting Tencent’s commitment to rewarding its workforce and strengthening its market position.

Tencent Grants Share Options to Boost Employee Engagement
Aug 14, 2025

Tencent Holdings announced the grant of 597,357 share options to employee participants under its Share Option Scheme, with an exercise price of HKD590 per share. This initiative aims to retain and incentivize employees, encouraging their contribution to the company’s long-term growth and success, without exceeding the 1% individual limit of shares in issue.

Tencent Reports Strong Growth in Q2 2025 Financial Results
Aug 13, 2025

Tencent Holdings announced its unaudited consolidated financial results for the three and six months ending June 30, 2025, showcasing robust growth. The company reported a year-on-year revenue increase of 15% for the second quarter and 14% for the first half of the year, driven by strong performances across its core business segments. Gross profit and operating profit also saw significant increases, indicating improved operational efficiency and market positioning. The results reflect Tencent’s continued strength in its digital ecosystem, benefiting stakeholders with increased earnings per share and profitability.

Tencent Strengthens Governance with New Nomination Committee Appointment
Jun 26, 2025

Tencent Holdings Limited has announced the appointment of Professor Ke Yang as a member of its Nomination Committee, effective from June 27, 2025. This strategic appointment is expected to enhance the governance structure of Tencent, potentially impacting its decision-making processes and reinforcing its commitment to strong corporate governance practices.

Tencent Holdings Announces Board Restructuring
Jun 26, 2025

Tencent Holdings Limited has announced changes to its board of directors, effective from June 27, 2025. The board will consist of Executive Director Ma Huateng, several Non-Executive Directors, and Independent Non-Executive Directors. The company has also updated the membership of its five board committees, with Ke Yang being appointed as a member of the Nomination Committee. These changes are expected to influence Tencent’s governance and strategic decision-making, potentially impacting its operations and market positioning.

Tencent Holdings Enhances Governance with New Audit Committee
Jun 26, 2025

Tencent Holdings Limited has established an Audit Committee as part of its corporate governance structure. This committee, composed of non-executive directors, is tasked with overseeing the company’s financial reporting processes, audit activities, and ensuring compliance with applicable standards. The committee is authorized to investigate activities within its scope, seek information from employees, and obtain external professional advice if necessary. This move is expected to enhance transparency and accountability, strengthening Tencent’s industry positioning and reassuring stakeholders of its commitment to robust governance practices.

Tencent Establishes Nomination Committee to Enhance Board Governance
Jun 26, 2025

Tencent Holdings Limited has established a Nomination Committee to ensure fair and transparent nominations for its Board of Directors. The committee, comprising a majority of independent non-executive directors, is tasked with reviewing the board’s structure and diversity, identifying qualified individuals for board membership, and making recommendations on director appointments and succession planning. This move is expected to enhance corporate governance and align the board’s composition with the company’s strategic goals.

Tencent Holdings Schedules Board Meeting for Interim Results and Dividend Consideration
Jun 23, 2025

Tencent Holdings Limited has announced that its board of directors will meet on August 13, 2025, to approve the company’s unaudited interim results for the first half of the year ending June 30, 2025. This meeting will also consider the payment of an interim dividend, which could have implications for stakeholders and reflect the company’s financial health and strategic direction.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 18, 2025