Huatai Securities published a report expressing persistent optimism about the commercialization potential of TENCENT (00700.HK)(TCEHY.US)'s advertising over the next three years. In the context of global social advertising, domestic commercialization avenues are more diverse, and social communication traffic entry points are more concentrated.

Compared to peers like Meta (META.US) and Douyin, WeChat's advertising monetization scenarios are way beyond those of social media, extending its ecosystem to live e-commerce, mini-programs, and payments, with a stable domestic traffic foundation that is superior to the relatively fragmented public-private segmentation overseas.

TENCENT's search advertising has broad prospects, with stronger AI search content barriers (public accounts and video accounts), while the integration of Hunyuan large AI models and SaaS layout provides synergy. Meta has remarkably improved advertising efficiency through AI, and TENCENT is assumed to follow its path for improvement.

Empowered by AI, the online advertising product matrix is rapidly iterating, and advertisers' budgets are expected to lean more towards online platforms (video > text). The broker anticipated TENCENT's market share to continue rising. The ad loading rate of video accounts is still majorly lower than Douyin and Kuaishou, with long-term revenue expected to reach RMB120 billion.
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