UOB Kay Hian Projects 13% Year-on-Year Revenue Growth for TENCENT in 4Q25, Reiterates Buy Rating
Revenue Growth Outlook: TENCENT is expected to achieve a 13% year-over-year revenue growth in 4Q25, driven by inventory release and advancements in AI technology.
Future Catalysts: Key future drivers for TENCENT include the launch of new flagship games in 2026, improved AI-driven advertising efficiency, and the introduction of AI-powered development tools for WeChat mini-programs.
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JPM: It's Premature to Identify Final Leaders in AI Applications, Favors BABA-W, BIDU-SW, and KUAISHOU-W
Changing Consumer Behavior: JPMorgan's research indicates a shift in consumer behavior towards using chatbots as primary tools for search, recommendations, and task execution, prompting large internet platforms to invest heavily in marketing to boost adoption and increase token consumption.
Investment Recommendations: The broker favors companies benefiting from China's AI infrastructure, such as Alibaba (BABA-W) and Baidu (BIDU-SW), as well as online advertising firms like Kuaishou (KUAISHOU-W), while noting the uncertainty in identifying long-term AI winners.
Tencent's AI Strategy: Concerns have been raised about Tencent's cautious approach to AI advancements compared to competitors, with the stock trading at a valuation that reflects some market apprehension, yet the broker believes its core earnings outlook remains strong.
Tencent's Competitive Edge: JPMorgan emphasizes that Tencent's greatest asset lies in its distribution and user engagement capabilities, which can enhance the scalability of new technologies, including AI, at a lower user acquisition cost than its peers.
<Midday Update> HSI Rises by 385 Points; HSTI Gains 55 Points; PING AN Surges Over 4%; YUM CHINA, LI NING, SHK PPT, BOC HONG KONG, and ZTO EXPRESS-W Reach New Peaks
Market Performance: The HSI rose by 385 points (1.5%) to 26,945, while the HSTI and HSCEI also saw gains of 55 points (1.0%) and 111 points (1.2%) respectively.
Active Heavyweights: Notable stocks included PING AN (+4.1%), HKEX (+2.8%), and BABA (+1.9%), with significant short selling activity reported for each.
Top Gainers: INNOVENT BIO and POP MART led the gains among HSI & HSCEI constituents, rising by 5.9% and 5.8% respectively, while KUAISHOU-W experienced a notable decline of 4.3%.
Significant Movements: CHINA EAST EDU and CHINA LIT saw substantial increases of 11.9% and 10.1%, while REALORD GROUP faced a significant drop of 10%.
HSI Starts 422 Points Up; HSBC HOLDINGS Gains 3%; Strong Performance in Chips and Commodities
Market Performance: The HSI opened 1.6% higher at 26,982, with significant gains in the HSCEI and HSTECH, reflecting a positive trend in the Hong Kong stock market.
Tech Sector Highlights: Major tech stocks like TENCENT and JD-SW saw increases, while KUAISHOU-W experienced a decline; overall, tech stocks showed a mixed performance with varying short selling ratios.
Automotive and Commodity Stocks: BYD COMPANY and other automotive stocks like NIO-SW and XPENG-W reported gains, alongside a rebound in commodity prices benefiting gold and mining stocks.
Financial Sector Gains: Financial stocks, including HSBC HOLDINGS and HKEX, opened higher, indicating a positive sentiment in the financial market amidst broader market gains.
TENCENT's Yuanbao AI Image Generation Sees 30-Fold Daily Increase in Usage
Stock Performance: TENCENT (00700.HK) experienced a decline of 2.922%, with short selling amounting to $2.97 billion and a ratio of 15.248%.
New Feature Launch: The "Yuanbao Party" is set to introduce a new Spring Festival red envelope feature, allowing users to receive cash red envelopes through interactions with Yuanbao.
Increased Usage: Since early February, the usage rate of Yuanbao's AI image generation feature has surged by 30 times, coinciding with the launch of the Spring Festival main venue on the Yuanbao APP.
User Engagement Growth: New users are engaging in over eight rounds of interactive Q&A with Yuanbao daily, leading to an 80% increase in daily usage time.
Report: Qianwen from BABA-W and Yuanbao Red Packet from TENCENT Now Allow Copying in WeChat
Stock Performance: BABA-W (09988.HK) saw a rise of 2.516%, while TENCENT (00700.HK) experienced a decline of 2.922% in their stock prices.
Short Selling Data: BABA-W had short selling of $2.37B with a ratio of 19.556%, while TENCENT's short selling reached $2.97B with a ratio of 15.248%.
WeChat Developments: Chinese media reported that WeChat has now allowed the copying of TENCENT's "Yuanbao" within its platform, following earlier restrictions against both "Qianwen" and "Yuanbao".
Market Context: The changes in WeChat's policies come amid a competitive landscape for AI red packets during the Spring Festival, where both companies were previously facing a blockade.
HKD4.3 Billion Net Inflow from Southbound Trading into TENCENT
Southbound Trading Inflows: TENCENT (00700.HK) saw significant Southbound Trading net inflows totaling HKD4.3 billion, while other stocks like BABA-W (09988.HK) and POP MART (09992.HK) experienced notable short selling activity.
Market Activity Overview: TENCENT was the most active stock in both Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect, with substantial net inflows, while stocks like XIAOMI-W and AKESO faced the highest net outflows.
Short Selling Statistics: The short selling ratios for TENCENT, BABA-W, and POP MART were 15.248%, 19.556%, and 27.852% respectively, indicating a high level of market speculation.
Overall Market Sentiment: The total Southbound Trading net outflow was HKD0, accounting for 35.67% of the total transaction amount of HKD88.42 billion, reflecting fragile market sentiment according to JPM.
JPM: It's Premature to Identify Final Leaders in AI Applications, Favors BABA-W, BIDU-SW, and KUAISHOU-W
Changing Consumer Behavior: JPMorgan's research indicates a shift in consumer behavior towards using chatbots as primary tools for search, recommendations, and task execution, prompting large internet platforms to invest heavily in marketing to boost adoption and increase token consumption.
Investment Recommendations: The broker favors companies benefiting from China's AI infrastructure, such as Alibaba (BABA-W) and Baidu (BIDU-SW), as well as online advertising firms like Kuaishou (KUAISHOU-W), while noting the uncertainty in identifying long-term AI winners.
Tencent's AI Strategy: Concerns have been raised about Tencent's cautious approach to AI advancements compared to competitors, with the stock trading at a valuation that reflects some market apprehension, yet the broker believes its core earnings outlook remains strong.
Tencent's Competitive Edge: JPMorgan emphasizes that Tencent's greatest asset lies in its distribution and user engagement capabilities, which can enhance the scalability of new technologies, including AI, at a lower user acquisition cost than its peers.
<Midday Update> HSI Rises by 385 Points; HSTI Gains 55 Points; PING AN Surges Over 4%; YUM CHINA, LI NING, SHK PPT, BOC HONG KONG, and ZTO EXPRESS-W Reach New Peaks
Market Performance: The HSI rose by 385 points (1.5%) to 26,945, while the HSTI and HSCEI also saw gains of 55 points (1.0%) and 111 points (1.2%) respectively.
Active Heavyweights: Notable stocks included PING AN (+4.1%), HKEX (+2.8%), and BABA (+1.9%), with significant short selling activity reported for each.
Top Gainers: INNOVENT BIO and POP MART led the gains among HSI & HSCEI constituents, rising by 5.9% and 5.8% respectively, while KUAISHOU-W experienced a notable decline of 4.3%.
Significant Movements: CHINA EAST EDU and CHINA LIT saw substantial increases of 11.9% and 10.1%, while REALORD GROUP faced a significant drop of 10%.
HSI Starts 422 Points Up; HSBC HOLDINGS Gains 3%; Strong Performance in Chips and Commodities
Market Performance: The HSI opened 1.6% higher at 26,982, with significant gains in the HSCEI and HSTECH, reflecting a positive trend in the Hong Kong stock market.
Tech Sector Highlights: Major tech stocks like TENCENT and JD-SW saw increases, while KUAISHOU-W experienced a decline; overall, tech stocks showed a mixed performance with varying short selling ratios.
Automotive and Commodity Stocks: BYD COMPANY and other automotive stocks like NIO-SW and XPENG-W reported gains, alongside a rebound in commodity prices benefiting gold and mining stocks.
Financial Sector Gains: Financial stocks, including HSBC HOLDINGS and HKEX, opened higher, indicating a positive sentiment in the financial market amidst broader market gains.
TENCENT's Yuanbao AI Image Generation Sees 30-Fold Daily Increase in Usage
Stock Performance: TENCENT (00700.HK) experienced a decline of 2.922%, with short selling amounting to $2.97 billion and a ratio of 15.248%.
New Feature Launch: The "Yuanbao Party" is set to introduce a new Spring Festival red envelope feature, allowing users to receive cash red envelopes through interactions with Yuanbao.
Increased Usage: Since early February, the usage rate of Yuanbao's AI image generation feature has surged by 30 times, coinciding with the launch of the Spring Festival main venue on the Yuanbao APP.
User Engagement Growth: New users are engaging in over eight rounds of interactive Q&A with Yuanbao daily, leading to an 80% increase in daily usage time.
Report: Qianwen from BABA-W and Yuanbao Red Packet from TENCENT Now Allow Copying in WeChat
Stock Performance: BABA-W (09988.HK) saw a rise of 2.516%, while TENCENT (00700.HK) experienced a decline of 2.922% in their stock prices.
Short Selling Data: BABA-W had short selling of $2.37B with a ratio of 19.556%, while TENCENT's short selling reached $2.97B with a ratio of 15.248%.
WeChat Developments: Chinese media reported that WeChat has now allowed the copying of TENCENT's "Yuanbao" within its platform, following earlier restrictions against both "Qianwen" and "Yuanbao".
Market Context: The changes in WeChat's policies come amid a competitive landscape for AI red packets during the Spring Festival, where both companies were previously facing a blockade.
HKD4.3 Billion Net Inflow from Southbound Trading into TENCENT
Southbound Trading Inflows: TENCENT (00700.HK) saw significant Southbound Trading net inflows totaling HKD4.3 billion, while other stocks like BABA-W (09988.HK) and POP MART (09992.HK) experienced notable short selling activity.
Market Activity Overview: TENCENT was the most active stock in both Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect, with substantial net inflows, while stocks like XIAOMI-W and AKESO faced the highest net outflows.
Short Selling Statistics: The short selling ratios for TENCENT, BABA-W, and POP MART were 15.248%, 19.556%, and 27.852% respectively, indicating a high level of market speculation.
Overall Market Sentiment: The total Southbound Trading net outflow was HKD0, accounting for 35.67% of the total transaction amount of HKD88.42 billion, reflecting fragile market sentiment according to JPM.
