On October 20, Haitong International issued a report projecting that Tencent Holdings (00700.HK) would generate revenue of RMB 210.2 billion in the third quarter, marking a 9% year-on-year (YoY) increase. However, it also predicted that the adjusted operating profit would amount to RMB 68.8 billion, reflecting a 5% YoY decrease. This decline is primarily attributed to the inclusion of AI-related depreciation and product investments within both revenue costs and operating expenses. Looking ahead, Haitong International forecasts Tencent’s revenue to climb to RMB 823.3 billion in 2026, representing a 10% YoY increase, with adjusted net profit reaching RMB 265.5 billion, a 2% YoY rise.

The report highlighted that AI continues to be a strategic investment priority for Tencent. Although short-term depreciation costs may persist in impacting financial performance, Tencent is expected to maintain a disciplined approach to resource allocation, avoiding automatic quarterly expenditure increases. Reflecting adjustments in earnings per share forecasts, Haitong International has slightly reduced Tencent’s target price by 2%, setting it at HK$470, while maintaining an "Outperform" rating.