The Global Point

Research evidence excerpt

The Global Point

Tencent Holdings (0700.HK) - Thoughts on Overreacted Share Sell-Off on Soft

Gaming Fear

We believe the 7% decline in Tencent's shares today (July 22) could be attributable

to market rotation back to AI hardware, renewed concerns of stepped-up AI

investment that drag profit, and fear and "misinterpretation" of 2Q26 gaming

grossing slowdown to a yoy decline in revenues. We believe the sell-off likely

suggests an overreaction especially following decent rebound in recent weeks.

While tracking data indicates a seasonal normalization in gaming grossing in 2Q,

we expect reported revenues to be smoother than expected, supported by deferred

revenue from previous quarters, stronger PC games performance that is not

captured by mobile tracking data. We currently forecast domestic games revenue

to +8% yoy and -3.9% qoq in 2Q26. Short-term fluctuations shouldn't

overshadow the fundamental strength of Tencent’s diversified and globalizing

gaming business, which underpins steady annual growth. We reiterate our Buy

rating and HK$758 TP and view the dip as an enhanced buying opportunity.

Alicia Yap, CFA

Yantai Jereh Oilfield Services Group (002353.SZ) - Securing >1GW Global CSP

Order; TP raised to Rmb196

Jereh has secured a landmark US$1.465bn contract to supply over 1GW of gas

turbine power generators to a leading global CSP, targeting to deliver by Nov-27.

Thus, we adjust our 2026E/27E EPS by -2%/+56%/+72%. The minor FY26E cut

reflects Middle East EPC delays from the Strait of Hormuz closure. For FY27/28E,

we raise power generator shipments from 800MW to 2.0/2.5GW. Our TP is revised

up to Rmb196 from Rmb146 based on 26x 2027E P/E – the stock’s average P/E + 2

std-dev over 2021-2022. We believe a 26x multiple is appropriate reflecting Jereh's