Tencent 0700 04 (Oct 21 - Dec 25)

[winston]

vested

Huatai Securities Drops TP of TENCENT (00700.HK) to $440, Predicts 2Q Adj. NP to Rise 27% YoY

2023/07/20

Huatai Securities anticipated that the 2Q23 operating revenue and adjusted net profit of TENCENT (00700.HK) to burgeon 13% and 27% YoY, respectively, in line with its previous forecasts.

The broker remained upbeat on the prospect of accelerated business growth for TENCENT in the second half of the year, owing to:-
1. The progressive launches of new game titles
2. Incremental investments from e-commerce
3. Verticals ads on Video Accounts
4, Lower base for cloud business
5. Continued rebound for offline payment and
6. Consistent gross margin improvement on optimization of revenue structure.

Related News: M Stanley Says CN Internet Sector Enters Easing Regulatory Cycle; BABA Expected to Be Prime Beneficiary

The report elaborated that the valuation of TENCENT has yet to fully reflect the long-term commercial potential of blockbuster game titles and WeChat.

The gross margin of the group was forecast to narrow by 0.8 ppts QoQ in 2Q23.

Huatai Securities tweaked the 2023-25E adjusted net profit for the company by -2.6%/ -2.1%/ +0.6% to RMB147.5 billion/ RMB177.4 billion/ RMB208.8 billion.

The target price on the stock was trimmed from HKD460 to HKD440, with its rating kept at Buy.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Internet – China
Riding On The Favourable Industry Backdrop

China’s online game market underwent a meaningful recovery trajectory in 1H23, riding
on a favourable industry backdrop.

We expect game revenue recovery momentum to continue into 2H23 as we anticipate upcoming pipelines with heavy monetisation potential to be unlocked and ultimately contribute to accelerated growth in game grossing.

The rapid AIGC development would promote efficiency in producing highquality games. Maintain MARKET WEIGHT.

Maintain BUY on Tencent (700 HK) with a target price of HK$435.00 which implies 25.8x PE based on 2023 EPS. We forecast game revenue to ramp up by 12.6% yoy in 2Q23 and grow 12% yoy for 2023.

The company currently trades at 20x 12-month forward PE, 1.2SD below its historical mean of 28x.

Our target price implies 25.8x 2023F PE against its historical average of 28x. We prefer Tencent in the online game universe for a value pick.

Source: UOBKH

https://research.uobkayhian.com/content ... 6780d5fb23

[winston]

not vested

Tencent Becomes Market Laggard as China Traders Sell

by Jeanny Yu

For the first time since 2021, onshore investors have sold Tencent shares on a net basis for two months in a row.

In July, mainland investors offloaded HK$2.9 billion ($375 million) through trading links between Hong Kong, Shenzhen and Shanghai exchanges.

Tencent’s put-to-call ratio, which underscores bearishness of a stock, has picked up since June after a sharp pullback earlier this year.

The Internet firm is expected to report a 14% year-over-year rise in revenue, accelerating from a quarter earlier, thanks in part to solid gaming revenue growth.

Source: Bloomberg

https://finance.yahoo.com/news/tencent- ... 34911.html

[winston]

vested

China’s Tencent misses expectations despite fastest profit rise since late 2021

by Arjun Kharpal

KEY POINTS

Tencent on Wednesday reported a surge in profit for the second quarter, but missed expectations.

Tencent is now starting to see the benefits of the cost-cutting drive it embarked on last year, when it exited non-core businesses and tightened marketing spending.

But the weaker than expected revenue growth continues to reflect the turbulent Chinese economy which has failed to recover after the pandemic as strong as many had thought.

Revenue: 149.21 billion Chinese yuan ($20.46 billion) vs. 151.73 billion yuan expected, representing a rise of 11% year-on-year.

Profit attributable to equity holders of the company: 26.17 billion Chinese yuan vs 33.42 billion yuan. That is a 41% year-on-year rise.

Tencent said its domestic game revenue remained flat year-on-year at 31.8 billion yuan.

Revenues from the International Games unit increased by 19% to 12.7 billion yuan.

Big rise in revenue in its advertising unit, with a 34% year-on-year jump to 25 billion yuan.

Source: CNBC

https://www.cnbc.com/2023/08/16/tencent ... idappshare

[winston]

TENCENT (00700.HK) Expects Domestic Games Revenue to Resume YoY Growth in 3Q23

TENCENT (00700.HK) noted in its results report that while its domestic games revenue was flat YoY in 2Q23 due to releasing less highly commercial content, the company believe this was a temporary phenomenon, and that its domestic games revenue should resume YoY growth in 3Q23.

TENCENT stated that the number of monthly and daily active accounts for both its mobile and PC games increased YoY, and three of its new game launches from the past two years ranked among the top 10 mobile games by total time spent during the quarter.

The company also highlighted that its evergreen titles still demonstrated vitality, such as Naruto Mobile and DnF, and have recently launched two big PC games in China, VALORANT and Lost Ark.

TENCENT vowed to continue to drive innovation, including through generative AI, where the company is providing a library of models to its partners via the Tencent Cloud Model-as-a-Service (MaaS) offering, as well as refining its proprietary foundation model.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

vested

Tencent Holdings (700 HK)
2Q23: Robust Ad Growth Momentum Offsets Tempered Online Game Revenue

Tencent’s 2Q23 results are slightly below our expectations.

Revenue grew 11.3% yoy to Rmb149.2b, 2% below consensus estimates.

Gross margin expanded 2ppt yoy to 45.5%, better than the street’s expectations.

Non-GAAP operating profit surged 36.7% yoy, and non-GAAP OPM expanded 6ppt yoy to 33.6%, better than our estimates.

NonIFRS net profit increased 33.4% yoy, 4% above consensus estimates, given a positive
revenue mix shift.

Maintain BUY with a slightly lower target price of HK$433.00.

Source: UOBKH

https://research.uobkayhian.com/content ... f34808fb64

[winston]

vested

CICC Expects TENCENT (00700.HK) 3Q Game Rev. Growth to Resume to 8% YoY

CICC, in its report, mentioned that TENCENT (00700.HK)'s non-IFRS net profit for the second quarter climbed 33% YoY to RMB37.5 billion, beating the broker's and the market's estimates by 6.9% and 3.6%, thanks to higher-than-expected gross margins in advertising and fintech and business services (FBS) businesses.

According to CICC, TENCENT's advertising revenue and gross profit, both grew impressively.

TENCENT's advertising revenue expanded 34% YoY to RMB25 billion in the second quarter, remarkably outperforming the broader market, on the ride of the company's optimization of the advertising platform's machine learning system to boost sales of slow-moving advertising inventory.

Related News: G Sachs Ramps Up TENCENT (00700.HK) TP to $431, Rating Buy

In addition, CICC pointed out that TENCENT's overseas games maintained high growth, while domestic games were suppressed in the short term.

The company's game revenue added 5% YoY to RMB44.5 billion in the second quarter, of which overseas games' hiked 19%, given the contribution of VALORANT and Goddess of Victory: Nikke, as well as the impact of the decline in player activity after the epidemic gradually subsided.

Domestic games were essentially flat YoY, mainly due to the company's initiative to reduce commercialized content in its leading products in the second quarter. TENCENT said that domestic game revenues will resume YoY growth in the third quarter.

CICC roughly maintained its revenue and profit forecasts for TENCENT for 2023 and 2024, and retained an Outperform rating with a target price of $475.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

vested

Brokers│Views

Nomura│Advertising revenue beat; online game revenue below forecasts

Citigroup│Higher-quality growth sustainable with upside offered by artificial intelligence

CMB International│2Q23 non-IFRS net profit beat

BofA Securities│WeChat services robust with lackluster performance from domestic game operations

Jefferies│Online advertising revenue beat; domestic game business weaker than anticipated

UBS│Improvement in domestic game business and strong advertising revenue expected to support 2H23 growth

Morgan Stanley│2Q23 GPM notably ahead of forecast

Credit Suisse│Quarterly results slightly above forecasts; cautiously optimistic outlook driven by sustainable margin uptick

JPMorgan│Revenue trend mixed with improved profit margin structure

HSBC Global Research│Clearer roadmap for margin expansion

CCB International│Quarterly results mixed with healthy outlook

Goldman Sachs│Robust advertising revenue mitigated weakness in domestic game business;
profit margin continued to expand

Daiwa│Advertising revenue charted outstanding growth

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Chinese super app WeChat gets bigger and more profitable as it takes on TikTok in short videos and lures ad dollars

WeChat’s short video service Channels brought in US$411.5 million in ad revenue in the second quarter as the app’s monthly users hit 1.327 billion

Tencent is pinning its hopes on Channels as a major new revenue driver as it ramps up monetisation efforts on the platform

by Iris Deng

Source: SCMP

https://www.scmp.com/tech/big-tech/arti ... b2ccb65e69

[winston]

vested

Tencent Holdings (700 HK) - Nothing to fear on near-term hiccup, long-term growth trajectory still intact

Over the long term, we expect advertising and financial services business, to be the growth engines for Tencent while the domestic gaming business matures.

Our investment thesis for Tencent as a strong allocator of capital to growth businesses and ability to generate sustainable long-term earnings growth continues to play out amidst the economic recovery in FY23.

Over the longer term, Tencent’s development of its own foundational artificial intelligence (AI) model could lead to new business opportunities and new sources of cost efficiencies.

Taking into account relatively attractive valuations vs historical trading ranges and future growth profile, we believe that investors should continue to stay invested in Tencent’s solid business franchise. BUY.

Source: OCBC