Institution: Tencent's first quarter game revenue may be dragged down by holidays and high base numbers, maintaining a buy rating on Tencent.

In a research report, the Daiwa analysts said that Tencent's game revenue in the first quarter may have been affected by the timing of the Chinese New Year holiday and base normalization. These analysts pointed out that the holiday season falling later resulted in a mismatch of timing, shortening the revenue recognition period for the first quarter. However, the outlook for Tencent's subsequent game reserve in 2026 remains positive, with new games expected to contribute revenue starting from the second quarter, including "Locke Kingdom". Daiwa has revised down its estimate of Tencent's game revenue growth in 2026 from 16% to 15%. They also added that the company plans to invest at least 18 billion yuan in AI in 2026, which is expected to increase its operating expense pressure. Daiwa maintains a buy rating on Tencent, but has lowered its target price from 725.00 Hong Kong dollars to 710.00 Hong Kong dollars.