Daily Brief Equity Bottom-Up: Tencent (700 HK): 2Q25 Preview and more

• We believe game revenue will continue to recover in 2Q25, riding on the policy easing.
• We also believe the operating margin will improve slightly due to the usage of AI.
• We expect the stock has an upside of 23% for year end 2025.

• On 6 August, the Korean government confirmed visa-free entry of group tourists from China to South Korea.
• The new policy will allow the group tourists from China to visit South Korea on a visa-free basis from 29 September 2025 to end of June 2026.
• We provide a list of top 20 companies in Korea that are key beneficiaries of the no visa policy for group tour visitors from China to South Korea.

• Expansion of Microsoft Research to Singapore as a regional research and development frontier
• Focus on AI research in Singapore, including foundational AI, embodied AI, and AI in health
• Importance of tapping into local talent and culture for AI development

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• American Electric Power’s (AEP) second quarter of 2025 showcased several pivotal developments and a strong financial performance, indicative of both strategic progress and growth potential.
• This summary encapsulates the earnings call highlights, offering a balanced view of the company’s current state and future prospects.
• First, AEP reported a record-breaking second quarter with operating earnings of $1.43 per share, a notable increase from the previous year’s $1.25 per share.

• Recruit Holdings (6098 JP) reported 1Q results on Tuesday after market. As expected, topline declined 2.5% YoY falling below consensus. Productivity enhancements supported EBITDA growth.
• With gradual cooling of labour markets, the HR Tech segment’s top line growth has declined and Recruit does not expect the segment to see strong growth in FY03/2026E.
• Recruit’s share price dropped 4.4% during today’s trade and with further weakening of job markets, we think there is further opportunity to gain on the Short side.

• Meta Platforms delivered a standout performance in the second quarter of 2025, with shares surging 12% to $779.70, just shy of its all-time high.
• The company significantly exceeded Wall Street expectations, reporting earnings per share of $7.14 versus the expected $5.88 and revenue of $47.5 billion, up 22% year-over-year.
• This strong financial showing was driven by growth in daily users, ad impressions, and price-per-ad across Meta’s platforms.

• Microsoft reported a strong finish to fiscal year 2025, delivering financial results that surpassed Wall Street’s expectations and underscored its continued momentum in cloud and AI-driven services.
• For the fiscal fourth quarter, Microsoft posted adjusted earnings of $3.65 per share on revenue of $76.4 billion, handily beating the consensus estimates of $3.37 per share on $73.9 billion in revenue.
• This marked a notable improvement over the prior year’s fourth-quarter figures of $2.95 per share on $64.7 billion in revenue.

• Qualcomm recently reported its fiscal third-quarter 2025 results, delivering revenues of $10.4 billion and a nonGAAP EPS of $2.77, which were near the high end of guidance.
• The company’s chipset business, QCT, recorded revenues of $9 billion, reflecting ongoing growth across automotive, IoT, and handset segments.
• Notably, automotive and IoT revenues increased by 21% and 24% year-over-year, respectively, driven by Qualcomm’s strategy to diversify and expand its product offerings beyond mobile handsets.

• An executive at Kuaishou Technology has identified Google as the No. 1 rival to its artificial intelligence (AI) video generator Kling AI, as the short-video specialist tries to capitalize on growing public interest in the tools.
• “Google is a very strong competitor to Kling AI in areas ranging from technology to AI infrastructure and talent, with co-founder Sergey Brin personally overseeing the research and development of its video generation models,” Wan Pengfei, head of Kuaishou’s visual generation and interaction center, said in an interview with Caixin on the sidelines of the World Artificial Intelligence Conference held in Shanghai from Saturday to Monday.
• Riding the AI video wave sparked by OpenAI’s text-to-video model Sora in early 2024, Kuaishou in June that year launched Kling AI, which can create short videos from written prompts and images.

• Kopran Limited has approved the merger of its diagnostics arm, Kopran Laboratories, aiming to become a fully integrated pharmaceutical and healthcare solutions provider. 
• The merger diversifies Kopran’s revenue mix, enhances EBITDA margins with high-value consumables, and unlocks synergies across pharma and diagnostics distribution channels. 
• Kopran transitions from a mid-scale exporter to a multi-vertical healthcare platform, with stronger earnings visibility, improved capital efficiency, and potential for valuation re-rating.