<Research>CICC Lists Predicted Capital Flows for Stocks with Big Weighting Changes in MSCI China Index Quarterly Review (Table)

The analyst rating from JPMorgan is based on several key factors: 1. Core Advantage: TENCENT's management highlighted that the company's strength lies in its replicable business model, which allows for localization and global scaling, rather than relying on single blockbuster products. 2. Market Potential: The estimated market size for shooting games is projected to reach US$38 billion by 2025, indicating significant growth potential in the gaming sector. 3. Business Model: TENCENT's 'three-engine' model of publishing, developing, and investing in game studios positions the company well to capitalize on the rapidly growing gaming market. 4. Long-term Growth: JPMorgan views TENCENT as a 'multi-year profit compound growth stock' that is leveraging AI and global expansion to improve business efficiency and quality, rather than focusing solely on cost-cutting or short-term gains. 5. Optimism About Growth Cycle: The overall outlook for TENCENT's growth cycle is positive, leading to the Overweight rating and a target price of $750. These factors collectively contribute to the optimistic analyst rating for TENCENT.

Daiwa's analyst rating for Tencent is a "Buy" with a target price of HKD750. The reasons for this positive outlook include: 1. Global Best Practices: Daiwa believes Tencent is effectively exporting best practices of "Games-as-a-Service" globally, which enhances the appeal of its games by blending Chinese and international influences. 2. Optimism in International Expansion: The broker is optimistic about Tencent's development and commercialization pace in expanding its gaming business internationally. 3. AI and Cloud Capabilities: Daiwa highlights Tencent's unparalleled AI and cloud capabilities, emphasizing the crucial role of AI throughout the entire game lifecycle. 4. Potential Risks: While the outlook is positive, Daiwa notes that a major potential downside risk is a miss in game sales. Overall, these factors contribute to Daiwa's confidence in Tencent's future performance in the gaming sector.

The analyst rating from Goldman Sachs is a "Buy" due to several key factors: 1. Expansion of Tencent Cloud: The company is strengthening its presence in key international markets, including ASEAN, Northeast Asia, Europe, the Middle East, and the Americas, which is expected to enhance its brand recognition. 2. Secured Large Project Orders: Tencent Cloud has secured multiple large project orders, indicating strong demand and potential for growth. 3. AI Applications: Tencent is positioned as a beneficiary of AI applications within China's leading Internet sector, which Goldman Sachs believes will drive long-term growth across its core businesses. 4. Unique Ecosystem and Assets: The combination of Tencent's WeChat ecosystem, global gaming assets, and diversified monetization capabilities is expected to support compound profit growth. These factors contribute to Goldman Sachs' confidence in Tencent's future performance, leading to the maintained Buy rating and a target price of HKD770.