Citigroup: raising Tencent's target price to HKD 695, company's games and advertising may have found a stable development path

Citigroup stated that Tencent's revenue growth accelerated to 13% in the first quarter, mainly benefiting from strong performance in domestic and international games as well as online advertising. They have raised Tencent's target price to 695 Hong Kong dollars and maintained a buy rating. Analyst Alicia Yap's report stated that the company seems to have clearly defined its stable development strategy by ensuring a long growth runway for its gaming and advertising business, operating perennial game blockbusters, and cultivating sustained small advertising spending by advertisers. Although the growth rate of profits and revenue may narrow due to investment in AI, negative operating leverage is not expected.