Nomura recently issued a research report, revealing that Tencent Holdings is set to announce its business performance for the third quarter around mid - this month. It is anticipated that, propelled by its high - margin sectors such as gaming and WeChat advertising, Tencent Holdings will witness a 4.1 - percentage - point year - on - year improvement in its gross profit margin, bringing it to 57.2%. This figure is expected to surpass market expectations.

Consequently, the company's quarterly Non - IFRS net profit is projected to experience an approximate 12% year - on - year growth. This growth rate is 2 percentage points higher than what the market has predicted.

Nomura predicts that Tencent Holdings' revenue for the last quarter will climb by about 13% year on year, reaching RMB 189 billion. This growth is attributed to the robust performance of its core businesses. Notably, its online gaming revenue is expected to grow by 18% year on year.

Nomura holds the view that WeChat Channels advertising and search advertising will act as significant growth drivers for Tencent Holdings. Moreover, it is expected that AI applications will boost the return on investment in advertising.

Given these factors, Nomura has decided to maintain its 'Buy' rating for Tencent Holdings and has raised its target price from HK$721 to HK$757.