Nomura: Raise Tencent's target price to HK $757, expecting Q3 Non-IFRS net profit to increase by approximately 12% year-on-year.

Nomura released a research report stating that Tencent Holdings will announce its third-quarter business in mid-month. It is currently forecasted that with the accelerated growth of high-profit businesses such as games and WeChat ads, the gross profit margin may improve by 4.1 percentage points to 57.2% year-on-year, higher than the market's expectation of 56.2%. This is expected to drive the non-IFRS net profit to grow by about 12% year-on-year, exceeding market expectations by 2%. The bank also predicts that Tencent's revenue in the last quarter will meet expectations, increasing by around 13% year-on-year to 189 billion yuan, with core businesses expected to perform steadily. Revenue from online games is expected to grow by 18% year-on-year, with revenue from games in China and overseas expected to increase by 15% and 25%, respectively. Nomura believes that WeChat video ads and search ads will continue to be drivers of growth for Tencent, while AI applications may improve ad ROI and contribute positively. They maintain a "buy" rating on Tencent and have raised their target price from 721 Hong Kong dollars to 757 Hong Kong dollars.