Citi: Expects Tencent Holdings' domestic game revenue to regain double-digit growth in the second quarter, with commercial services revenue accelerating to over 20%
Citi released a research report, maintaining Tencent Holdings' "highly confident outperform" rating and a target price of HKD 740. It is expected that Tencent's total revenue in the second quarter will grow by 9.7% year-on-year to RMB 202 billion. Domestic game revenue is driven by new games to regain double-digit growth, commercial services revenue accelerated to over 20% under the boost of AI, and advertising revenue also maintained a growth rate of about 20%
According to the Zhitong Finance APP, Citi has released a research report stating that it expects Tencent Holdings (00700) to achieve a year-on-year growth of 9.7% and 9.1% in total revenue and adjusted EBIT for the second quarter, reaching RMB 202 billion / RMB 75.6 billion, with profit margins remaining relatively stable. Driven by new games "Delta Force," "Valorant Mobile," and "King of Rock: World," online gaming is expected to regain double-digit year-on-year growth of 10%, although evergreen games are slowing down. Online advertising revenue is expected to continue recording approximately 20% year-on-year growth, while revenue from commercial services is expected to accelerate to a year-on-year growth of 20% driven by AI. The rating of "Highly Confident to Outperform the Market" is maintained, with a target price of HKD 740 unchanged.
Citi expects domestic game revenue to regain double-digit growth in the second quarter, with a year-on-year increase of 10% to RMB 44.4 billion, mainly supported by the strong performance of "Delta Force" and new games "Valorant Mobile" and "King of Rock: World." Domestic game revenue will also benefit from deferred revenue generated by robust performance during the Lunar New Year period in the first quarter of 2026. However, several evergreen games have shown significant slowdown in the second quarter. International game revenue is expected to grow by 9.8% year-on-year to RMB 20.6 billion in the second quarter.
The bank expects revenue from financial technology and commercial services to grow by 9% year-on-year to RMB 60.6 billion in the second quarter, driven by accelerated growth in cloud services and enterprise SaaS, partially offset by a slowdown in payment business growth. Revenue from commercial services is expected to grow by over 20% year-on-year, driven by increased adoption by small stores, enhanced SaaS monetization, strong demand for AI inference, and price increases. Tencent's Hy3 has become one of the top three models on OpenRouter, with WorkBuddy being the most used office agent on Chinese PCs
