$Tencent Holding Ltd.(TCEHY)$ is scheduled to release its fiscal Q1 2025 earnings on Wednesday, 14 May 2025,
Revenue: Analysts are generally forecasting Q1 2025 revenue to be around CNY 175.4 billion to CNY 175.55 billion, which would represent an approximate 10% year-over-year increase. Some estimates also point to an average revenue of USD 24.15 billion.
Earnings Per Share (EPS): Estimates for EPS are in the range of CNY 5.588 to CNY 5.59, suggesting a significant year-over-year growth of around 27.4%.
In USD terms, the average EPS estimate is around USD 0.881, a substantial increase from the USD 0.623 to USD 0.73 reported in the same quarter last year.
Adjusted Net Profit: Brokers are optimistic, expecting Tencent's adjusted net profit for Q1 2025 to surge by 15.6% to 27.4% year-on-year.
Some Recent Noteworthy Developments To Take Note
Positive Stock Performance: Tencent's shares have recently shown consistent gains and positive technical signals, trading above key moving averages.
Strategic Investments & Partnerships: Tencent recently entered into a significant long-term carbon credit agreement with GenZero to support its carbon neutrality goals.
A Tencent-backed fintech firm, Primer, reported a 239% year-on-year growth in payment volume in the APAC region.
Geopolitical and Economic Factors: While Tencent is seen as relatively unaffected directly by recent US tariffs, its fintech and advertising divisions could experience secondary impacts from broader effects on the Chinese economy. The risk of further US sanctions also remains a background factor.
Insights Into Tencent’s Business Key Areas Expected
Investors and market analysts will be looking forward to the eventual release of this report, which will provide insights into key areas of Tencent's business, including:
Gaming: Performance of domestic and international game titles.
Social Networks: User growth and engagement for WeChat and QQ.
Advertising: Revenue growth trends in social and media advertising.
FinTech and Business Services: Growth in payment services, wealth management, and cloud computing.
Profitability: Overall revenue, net profit, and margin trends.
Future Outlook: Management's guidance and commentary on upcoming quarters.
Tencent (TCEHY) Last Positive Earnings Call Saw Share Price Decline By 9.12%
Tencent had a positive earnings call on 19 March 2025 which saw its share price declined by 9.12% since.
Tencent demonstrated strong financial performance with significant growth in revenue, profit, and AI initiatives. Notable achievements were seen in games, music, and marketing services. However, increased CapEx impacted free cash flow, and there were challenges in fully capturing AI service demand due to supply constraints. Despite these challenges, the overall sentiment remains positive due to the company's robust growth and strategic advancements.
Tencent (TCEHY) Guidance
During Tencent Holdings Limited's 2024 Fourth Quarter and Annual Results Announcement Webinar, several key financial metrics and strategic insights were highlighted. The company reported a total revenue of RMB172 billion for the fourth quarter, marking an 11% year-on-year increase. Gross profit reached RMB91 billion, up 17% year-on-year, while non-IFRS operating profit increased by 21% year-on-year to RMB59 billion. Non-IFRS net profit attributable to equity holders rose by 30% year-on-year, totaling RMB55 billion.
For the full year, Tencent's marketing services revenue grew by 20%, and they paid out HKD32 billion in cash dividends while repurchasing HKD112 billion worth of shares. Additionally, Tencent's AI initiatives were highlighted, with investments leading to a threefold increase in annual CapEx to $10.7 billion, equivalent to approximately 12% of their revenue. The company plans to continue investing in AI, aiming for further growth and innovation while balancing shareholder returns.
Key Focus Areas for Tencent Holding (TCEHY) Q1 2025
Total revenue was RMB172 billion, up 11% year-on-year. Gross profit was RMB91 billion, up 17% year-on-year. Non-IFRS operating profit was RMB59 billion, up 21% year-on-year, and non-IFRS net profit attributable to equity holders was RMB55 billion, up 30% year-on-year.
Gaming Revenue: Analysts will be closely watching the performance of Tencent's dominant gaming division, with expectations of robust growth, potentially driven by seasonal domestic strength in video games.
Domestic Games revenue grew 23% year-on-year. International Games revenue increased 15%. Tencent Music subscribers grew to 121 million with an 18% increase in music subscription revenue.
Advertising Revenue: Continued strength in advertising sales is anticipated to be a significant contributor to overall revenue growth.
Marketing Services revenue grew 17% to RMB35 billion in Q4 2024, driven by AI enhancements, with Video Accounts marketing services revenue growing over 60% year-on-year.
Fintech and Business Services: Growth in the fintech segment and developments in cloud services will be key areas of interest. While AI is a core focus, analysts do not expect significant incremental earnings from AI initiatives in the immediate term for this quarter.
Commercial payment revenue remained largely stable year-on-year, with ongoing pricing pressure despite increased transaction volumes.
AI Monetization: While immediate large-scale revenue from AI isn't the primary expectation for Q1, any updates on Tencent's AI strategy, investments (such as the reported Q1 2025 purchase of Nvidia H20 chips by Chinese tech giants including Tencent), and initial monetization efforts will be scrutinized.
Tencent advanced HunYuan capabilities, integrated AI across businesses, and achieved significant growth in Yuanbao, which became the third highest AI native mobile application in China by DAU.
Demand for AI services was strong, but supply constraints limited the ability to capture this demand fully due to delayed GPU deployment.
Profit Momentum: After an exceptional 2024, analysts expect Tencent's profit momentum to normalize in 2025, with EPS growth potentially decelerating to a low-double-digit percentage range for the full year. However, a sequential rebound in adjusted profit is anticipated for Q1.
Tencent paid HKD32 billion in cash dividends and repurchased HKD112 billion worth of shares during the year.
Operating CapEx was RMB34.9 billion, up 421% year-on-year, driven by investment in AI capabilities, leading to a significant reduction in free cash flow, which was down 87% year-on-year.
Tencent (TCEHY) Price Target
Based on 1 analyst from Tiger Brokers offering 12 month price targets for Tencent Holdings in the last 3 months. The average price target is $88.00 with a high forecast of $88.00 and a low forecast of $88.00. The average price target represents a 39.06% change from the last price of $63.28.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at how Tencent have been performing over the past week, we can see that the bulls are gaining control back with RSI showing increased momentum. This is inline with what the market expect to see a solid revenue growth and significant profit as well, the main contributors would be the core gaming and advertising.
I think we should see some increased investors sentiment when trading starts on Monday (12 May), and there might an increased in trading volume for this stock.
Summary
The general sentiment heading into Tencent's Q1 2025 earnings report appears to be positive, with expectations of solid revenue and significant profit growth, primarily driven by its core gaming and advertising businesses. Investors will be keen to understand the progress in newer areas like AI and the outlook for sustained growth across its diverse segments.
Appreciate if you could share your thoughts in the comment section whether you think Tencent would be able to continue its growth with strong contribution from core gaming and advertising.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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