Tencent’s 4Q21 results were lower than we expected. The 13% yoy drop in online ad revenue dragged down overall performance. Online game revenue was impacted by policy, but the performance of fintech and business services was relatively stable. 2022 will be challenging for the industry, and Tencent especially in 1H, given delays in the launch online game licenses and the implementation of regulations in different segments. We lowered our net profit forecasts slightly for 2022F and 2023F after the 4Q21 results announcement. The cut in net profit forecasts and management guidance is expected to put pressure on Tencent shares in the near term. We still hold a constructive view on the Company, as we believe that its investment will translate into future growth. Reiterate ADD with a new DCF-based target price of HK$485.2 (down from HK$520.3). A near-term catalyst would be the resumption of the release of online game licenses by the Chinese government.