HSBC: Tencent's Gaming Recovery On Track

The report suggests that Tencent's mobile game revenue for 1Q24 is forecasted to grow, driven by strategic adjustments and robust performance from key titles like Fight of the Golden Spatula and CrossFire Mobile.

The brokerage firm believes that Tencent is regaining momentum in its growth trajectory and anticipates further improvement in the second half of 2024.

Expectations include Tencent's active adjustments to its game portfolio to revitalize underperforming titles and enhance user loyalty and payment rates for new games.

HSBC maintains a Buy rating on Tencent, foreseeing continued recovery in its game business and growth in advertising, fintech, and business services to support earnings growth.

The report also anticipates Tencent's ongoing buyback program to mitigate sell-down pressure, with a target price of $385. Profit forecasts for 2024-26 remain largely unchanged.