Tencent 0700 02 (Jan 15 - Aug 18)

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TENCENT Reportedly Mulling for US$2B Syndicated Loan

TENCENT (00700.HK) is mulling with banks about getting a five-year syndicated loan of as much as US$2 billion, foreign media quoted from people familiar with the matter, as saying.

The raised capital will be used for acquisitions and the entering of financial services and other new domains.

Source: AAStocks Financial News

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Pony shares fortune

Mainland technology giant Tencent (0700) chairman and chief executive Pony Ma Huateng (pictured) said he will donate 100 million shares of his flagship company worth HK$16.57 billion according to its closing price yesterday.

The personal donation will be injected into a yet to be set up philanthropic foundation. It will focus on health care, education and the environment in China, working with charities and campaigners already involved in such sectors. It also aims to support innovative projects related to cutting- edge technology and basic science research around the world.

"After 10 years of exploration and participation in philanthropic activities, I increasingly feel a better way to continue giving back to society, is to do it over a longer term and in a more organized way," Ma said. Getting a professional team to oversee these projects will also improve their management, he said.

Ma last week offloaded a portion of his stake in Tencent to cash in HK$4.23 billion, the highest amount since 2005.

From April 12 to 15, he has sold 25.939 million shares at prices of HK$159.823, HK$162.95, HK$163.705 and HK$164.776 on the respective days. Followed by the disposal, Ma's ownership in Tencent shrank to 8.82 percent from 9.09 percent. The stock closed at HK$165.70 yesterday, up 0.24 percent.

Source: The Standard

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Tencent Q1 Earnings Beat Estimates

By Shuli Ren

Tencent Holdings (700.Hong Kong/TCEHY) is best in class.

In the March quarter, revenue at Tencent increased by 43% from a year ago to 32 billion yuan, exceeding street expectation of 35.3% growth.

Profit attributable to equity holders increased by 33% year-on-year to 9.2 billion yuan, better than 8.95 billion yuan expected by the street.

Online advertising was the bright spot. Revenue from Tencent’s advertising business jumped by 73% year-on-year to 4.7 billion yuan.

Meanwhile, value-added services revenue, mostly gaming, rose by 34% year-on-year to 24.96 billion yuan, driven by new smartphone games and their key PC titles.

By the end of March, Tencent collected 762 million monthly active users on its WeChat platform, a 9.4% rise from the December quarter.

Tencent will host a conference call at 8PM Hong Kong time and we will get more color from the management then.

Source: Barron's Asia

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<Research Report>C Suisse: TENCENT Results Driven by Games & Social Networks Revenue; Payment Cost Not to be Feared

TENCENT (00700.HK) 1Q revenue topped estimates, mainly due to strong mobile games momentum and networks revenue, solid growth of payment revenues, as well as WeChat MAU of 762 million.

Credit Suisse raised the target price to $190 from $185, implying 35.2x/ 28.5x 2016/ 2017 adjusted P/E.

The rating was maintained at Outperform.

Source: AAStocks Financial News

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<Research Report>Daiwa Raises TENCENT Target to $205; Rated Buy

Daiwa was positively surprised by TENCENT (00700.HK)?s strong 1Q16 results, with revenue and non-GAAP net profit 6% and 5% above consensus respectively.

It acknowledged the macro risk to brand ads? revenue, but expected healthy revenue growth in performance ads and mobile game to be the main top line growth drivers into 2H16. TENCENT remains the top pick of the research house for the sector.

The research house reiterated the company at Buy with target price lifted from $200 to $205. It raised the 2016-18E non-GAAP EPS by 2-4.6% to factor in higher mobile-game revenue, lower brand-ads revenue and slightly lower operating expenses.

In the short term, the research house believed domestic macro uncertainties could lead to some brand advertisers temporarily postponing spending, but believe the impact to TENCENT should be small and could be offset, at least partially, by the upcoming Olympic marketing peak season.

It estimated TENCENT?s mobile ads ARPU is only nearly 50% of Facebook?s Asia mobile ads ARPU and nearly 25% of Alibaba?s mobile ads ARPU as of 1Q16, suggesting a huge potential to catch up.

1Q16 mobile-game revenue hit a record high, up 16% QoQ and 86% YoY, due to favourable CNY holiday seasonality and strong game launches.

Source: AAStocks Financial News

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<Post-Result>Brokers' Latest Ratings & TPs for TENCENT (Table)

TENCENT (00700.HK) announced the results for the first quarter of 2016 on 18 May.

According to non-GAAP, the net profit rose 39.29% yearly to RMB10.032 billion, above estimates; the turnover rose 42.84% yearly to RMB31.995 billion. Numerous brokers have lifted the target prices.

11 brokers' latest ratings and target prices to TENCENT are listed as follows:

Broker/Rating/Target price (HK$)

Daiwa/ Buy/ 200->205
Macquarie/ Outperform/ 196->204
UBS/ Buy/ 190->195
Nomura/ Buy/ 194
Citigroup/ Buy/ 192
Credit Suisse/ Outperform/ 185->190
HSBC/ Buy/ 191->185
BOCOM International/ Long-term Buy/ 180->184
BOC International/ Buy/ 170->181
JPMorgan/ Overweight/ 183->180
Deutsche/ Buy/ 175->167

Source: AAStocks Financial News

[winston]

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Why Tencent Wants Supercell

By Shuli Ren

The Wall Street Journal reported that Tencent Holdings (700.Hong Kong) is in talks with Japan’s SoftBank to buy the Japanese company’s majority stake in Finland’s Supercell, which makes some of the world’s most popular mobile games such as Clash of Clans. SoftBank has a 51% stake.

Tencent is already the world’s dominant player in PC games. Folding in Supercell can boost its mobile gaming platform and earnings substantially, by as much as 19% of its net income. Northern Trust‘s Douglas Morton notes:

Supercell generated around $2.3bn of revenue in 2015 revenue ($924m in net income) and according to Bloomberg reports are on track to achieve £3bn in revenue this year with a 40% Net Income margin. These figures would imply Softbank’s proportion of Supercell’s financials would be in the region of 13% of Tencent’s revenue and 19% of their Net Income.

In the March quarter, Tencent beat analysts’ earnings estimates because its mobile gaming revenue covered some of the advertising weaknesses.

Second, China is home to the world’s most avid game boys, so there is a natural fit. China already has about a quarter of global gaming revenue and is estimated to account for 58% of global gaming growth this year, according to market research firm Newzoo.

Meanwhile, smartphone gaming is the fastest growing segment with 24% growth rate. Particularly for Tencent, buying a popular mobile game publisher is “the most valuable area for marginal investment currently,” noted Morton.

Tencent rose 0.9% this morning after the Journal report, while the Hang Seng Index was down 0.2%.

Source: Barron's Asia

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<Research Report>Citi: TENCENT Has Diversified Biz Model; Rated Buy with Target of $192

Citigroup, in its report, said TENCENT (00700.HK) is one of the broker's top picks riding because of its social ecosystem with diversified business models, thus the broker maintained the rating Buy and target price at $192.

Tencent shares surged by 8% last week, with key news flow such as Puzzle and Dragons (PAD) commenced pre-registrations on Weixin and QQ platforms; as well as news reports of Tencent in talks about the purchase of stake in Supercell, a mobile game company.

Citigroup said since 2011, Tencent has been successful in game licensing, and PAD and Supercell's blockbuster titles Clash of Clans and Clash Royale are popular overseas.

Citigroup believed that one of the factors for better-than-expected smartphone games revenue in 4Q15 and 1Q16 come from the success of various authorized games, as well as the continued strengthening of mobile infrastructure, such as payments facilitates monetization, with over 300 million Weixin / QQ mobile payment accounts bundled with bank cards.

The broker reiterated its view that 2016 is a year of Tencent in smartphone games.

Source: AAStocks Financial News

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TENCENT Plans to Launch Mobile Payment in 10K Stores in Japan, Report Says

TENCENT (00700.HK) plans to launch mobile payment in 10,000 stores in Japan, so as to facilitate Chinese shoppers, as Japanese press reported.

Shops only need to download an app on iPad or other tablets, and scan the QR code on the customer's smartphone, then the payment is done.

CCB will be in charge of the transaction clearing.

Source: AAStocks Financial News

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Life in the People’s Republic of WeChat

My full (and mostly successful) immersion in China’s everything app.

by Dune Lawrence

I’ve had WeChat on my phone since a vacation to Beijing last year, when friends there essentially ordered me to download it.

More than 760 million people use it regularly worldwide; it’s basically how people in China communicate now.

It’s actually a lot of trouble not to use WeChat when you’re there, and socially weird, like refusing to wear shoes.

Source: Bloomberg

http://www.bloomberg.com/news/articles/ ... _campaign=