Hong Kong-listed Tencent Holdings Limited (HK:0700) has earned favourable support from analysts, driven by the solid outlook for its gaming revenue growth. Earlier this week, analysts from CMB International and CGS-CIMB reiterated Buy ratings on the stock, predicting an upside of over 25%.
Tencent Holdings is a technology company that delivers digital entertainment and internet value-added services to over one billion users.
CGS Maintain Bullish Stance on Tencent
Analyst Lei Yang of CGS-CIMB expects Tencent’s game revenue to grow 13% year-over-year in the third quarter of 2024, compared to 9% in the second quarter. This is mainly attributed to the launch of the new game, Dungeon & Fighter (DnF) mobile.
Yang believes that Tencent’s flagship games, such as Game for Peace and Honor of Kings, will drive strong revenue growth in both domestic and global markets. Additionally, Yang is bullish on the company’s margins, as Tencent pivots to higher-margin revenue streams and optimizes costs. Yang projects a 14% year-over-year increase in Q3 gross profit.
Overall, CGS-CIMB projects Tencent’s Q3 revenue to grow 7.6% year-over-year, with a 14.9% increase in non-GAAP net profit.
CMB International Reaffirms Optimistic Outlook
Similarly, Saiyi HE from CMB International Securities is also bullish on Tencent’s gaming division. Saiyi stated that the company’s new and existing mobile games have demonstrated solid performance and high user engagement. Since its launch in May, DnF Mobile has consistently ranked among the top five-grossing iOS games in China. Moreover, high-margin segments like Video Accounts and Mini Games are poised to drive further earnings growth.
CMB expects a 13% year-over-year growth in games revenue, reaching ¥51.8 billion in Q3.
Tencent will announce its third-quarter results for 2024 on November 13.
Is Tencent a Good Stock to Buy Now?
According to TipRanks’ rating consensus, 0700 stock has received a Strong Buy rating, backed by 13 Buys and one Hold recommendation. The Tencent share price forecast is HK$515.98, which implies an upside of 24.09% on the current trading level.
Year-to-date, Tencent stock has grown by 39.1%.
