Daiwa Research cut its target price for Tencent Holdings (00700) to HK$410 from HK$420 and maintained its "buy" rating.
The research house hosted a non-deal roadshow (NDR) with Tencent on 8-11 October. Investors were mainly interested in Tencent's game performance, and the potential launch of smartphone game titles in China.
With the stock correcting by 12% since its recent peak in July, Daiwa believes the market has factored in weak advertising revenue. It sees the potential share price upside from better-than-expected smartphone game revenue for 2H.
Daiwa adjusted its 2019-21 earnings forecasts by 1%/-1%, after trimming our advertising and FinTech and business services revenue but have turned incrementally more positive on its margin profile.
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