CICC: Tencent Holdings maintains a "outperform" rating with a target price of 666 Hong Kong dollars.

China International Capital Corporation (CICC) released a research report stating that Tencent Holdings' first quarter Non-IFRS net profit increased by 11% year-on-year, meeting market expectations. Due to the impact of deferred revenue, first quarter revenue increased by 9% year-on-year, which was lower than market expectations. CICC maintains its revenue and Non-IFRS net profit forecast for Tencent for this year and next year. They maintain an "outperform" rating and a target price of HK$666, corresponding to a forecasted Non-IFRS P/E ratio of 20 times this year. The report stated that Tencent's first quarter game business revenue growth was impressive, with record high revenue from perennial games. The later timing of the Chinese New Year this year resulted in some game revenue and revenue sharing being deferred to subsequent quarters for recognition. The bank predicts that domestic game revenue will increase by 12% year-on-year in the second quarter, while overseas game revenue will increase by 10%.