Mar 11, 2020 (China Knowledge) - In its latest research note, Goldman Sachs reiterated its 'Buy' rating on Tencent and raised its price target to HKD 490 from HKD 485.
Goldman Sachs is mainly optimistic about Tencent's game business, believing that the release of Dungeon & Fighter mobile game in H1 this year, and the release of League of Legends mobile game next year will be the main sources of growth for Tencent games from the H2 2020 to the next year. It is reported that the computer side of the two games has attracted about 1 bln registered users worldwide over the past three years, with more than USD 8.7 bln in revenue.
But Goldman also suggested the investors about the short-term risk, revenue growth in Tencent's advertising and payments businesses will slow as the COVID-19 outbreak affects businesses and offline spending.
In addition to Goldman Sachs, Tencent has recently been favored by a number of international investment banks.
A week ago, Nomura raised Tencent's revenue forecast for the 2020/2021 fiscal year by 1%, raising its target price from HKD 437 to HKD 440. In the report, Nomura made a forecast for Tencent's upcoming Q4 results in 2019, predicting that Q4 revenue will increase 24% YoY to HKD 105 bln and earnings per share (EPS) will increase 28 % YoY to HKD 2.64.
Last week, JPMorgan increase its stake in Tencent (0700) by about 4.17 mln shares at HKD 404 each share, for about HKD 1.68 bln in total. With that increase, JPMorgan's stake in Tencent has risen to 5% (479 mln shares).
As of today, 51 of 59 analysts tracked by Bloomberg have a ‘Buy’ rating on Tencent, while 8 have a ‘Hold’ rating and no ‘Sell’ rating.
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