Tencent's game business is performing well, providing some earnings visibility, according to UBS' research report. The data shows that Tencent's domestic grossing during the Lunar New Year (LNY) period beat expectations, with an estimated double digit level YoY incline.
Besides the contribution from its blockbuster game “Dungeon & Fighter: Origins,” the broker also attributed the performance to the launch of new skin packages with different price points by its existing evergreen games, such as flagship game, “Honor of Kings" (HOK), to cater the needs of different users.
Looking forward to more new game launches by Tencent, UBS believed that it will help alleviate the market's concern about a possible slowdown in growth after the strong growth in 2024. Therefore, the broker elevated its target price to HK$593 from HK$588, with rating at Buy, and raised its 2025/ 2026 EPS forecasts by 1%.
The broker estimateTencentNT to benefit from 3 potential favorable factors this year, including less market competition, incremental new users and higher ROI for its advertising business.
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