UBS Raises TENCENT TP to $438; Overseas Game Recovery Overlooked

TENCENT's international games recovery seems to have been overlooked by investors, UBS said in a research report, citing industry data that said Supercell, a Finnish mobile game company that TENCENT acquired earlier this year, was expected to resume growth in 1Q24, with revenues expected to spike as much as 82%. As Supercell contributed approximately 10% of TENCENT's game revenue, it was expected to directly benefit TENCENT's growth.

On top of the DnF mobile launch, the potential rebound in the existing games may also entail upside. Harnessing the Weixin ecosystem, revamping existing games and medium-term monetization of AI technology applications should improve TENCENT's earnings growth visibility.

UBS raised its 2024-2026E EPS by 3%-4%, and TP to $438.