[ET Net News Agency, 4 November 2020] Morgan Stanley lifted its target price for
Tencent Holdings (00700) to HK$650 from HK$570 and maintained its "overweight" rating.
The research house forecast 3Q revenue at Rmb124.5bn (+28% YoY, +8% QoQ) with strength
in mobile game deferred revenue. Morgan factored in gradual normalization across business
lines, considering muted user growth in online entertainment and weaker seasonality in
games, offset by the ongoing recovery in ads and payments.
It estimated 3Q non-IFRS net profit at Rmb30.9bn (+26% YoY, +2% QoQ) from streamlined
S&M. Morgan expects the market will focus on Tencent's cloud and fintech strategies given
competitor's comments on cloud and potential regulatory changes.
Morgan raised its 2020-22 non-IFRS EPS forecasts by 2-4% to factor in consolidation
impact from recent M&A. (KL)