Nomura cut its target price on Tencent (00700.HK) to HK$659, citing profit
pressure from continued AI investment. It said Tencent’s Q3 revenue was roughly
in line, up 9% YoY, but non-IFRS operating profit fell 3% YoY to 70.3 bln yuan,
about 2% below market expectations. Non-IFRS operating margin slid 4.1ppt YoY to
33.5%. Capital expenditure rose to 58.7 bln yuan, up 11% QoQ and 352% YoY.
Nomura trimmed FY2026 and FY2027 non-IFRS EPS forecasts by 2% and 3%
respectively to reflect margin strain from AI spending and slightly slower games
growth. Rating stays Buy; new PT implies 19x FY2027 PE versus the stock trading
at c.12x FY2027f PE.
