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vested

Tencent Holdings (0700.HK) 3Q21 preview; potential impacts from regulations are key

We expect 3Q21 total revenue to grow +14% YoY to Rmb143.4 bn.

Adj. net profit is expected to grow by 1% YoY to Rmb 32.8 bn.

By segment: We expect mobile games rev at +9% YoY mainly on resilience in flagship titles without major new launches.

Online ads are expected to slow down to 9% YoY mainly on regulatory headwinds hurting social ads.

Fintech and business services may moderate to 32% YoY due to offline payment weakness from COVID resurgence.

Key focus:
(1) impact (if any) from recent online game content regulation and key mobile game pipeline (LoLM and DnFM) updates;
(2) ad demand outlook amid a slowing macro and impact from personal information protection regulation;
(3) margin outlook from stepping up of investments; and
(4) other regulatory updates.

Tencent is trading at 24x 22E P/E. Ex its strategic investments (50% of market cap), the implied core valuation is even lower.

We trim our 2021-22E EPS by 0-2% and lower TP to HK$640 (from HK$680) on lower valuation of listed associates. Maintain OUTPERFORM.

Source: CS

not vested

M Stanley's Forecast on TENCENT (00700.HK) 3Q21 Result (Table)

Items│3Q21E│YoY Change
Total revenues│RMB145.270 billion│+15.8%
Gross profit│RMB64.946 billion│+14.7%
GPM│44.71%│-0.4 ppts
Net profit│RMB25.467 billion│-33.9%
Non-IFRS net profit│RMB32.188 billion│-0.4%

Source: AAStocks Financial News

Brokers: Tencent's 3Q Non-IFRS NP May Inch Up; Ad, Online Game Growth Slowed by Regulation

TENCENT (00700.HK) will unveil the result for the third quarter ended September 2021 on 10 November.

According to brokers' forecasts as compiled by our reporters, the firm's 3Q21 non-IFRS net profit may range RMB27.434-36.073 billion, a change of -15.1% to +11.7% YoY. The median forecast is RMB32.575 billion, up 0.8% YoY.

Tencent's mobile game revenue may leap 9% YoY, backed by flagship titles in absence of big rollouts.

Its online ad revenue growth could ease to 9% YoY given social ad impact from regulation.

Related News: JPM Trims TENCENT (00700.HK) TP to $630, 3Q Revenue Growth May Decelerate

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Brokers│3Q21E Non-IFRS NP (RMB)│YoY change
Shenwan Hongyuan│36.073B│+11.7%
BOCOMI│36.005B│+11.5%
KeyBanc Capital Markets│35.115B│+8.7%
ICBCI│34.2B│+5.9%
Jefferies│33.2B│+2.8%
GF Securities│32.8B│+1.5%
Credit Suisse│32.766B│+1.4%
CICC│32.613B│+1%
Essence International│32.608B│+0.9%
CCBI│32.541B│+0.7%
CITIC Securities│32.535B│+0.7%
CSC Financial│32.5B│+0.6%
Morgan Stanley│32.188B│-0.4%
CLSA│31.581B│-2.2%
Citigroup│31.488B│-2.5%
JPMorgan│29.349B│-9.1%
Daiwa│29.51B│-8.6%
UBS│27.434B│-15.1%

Based on 3Q20 non-IFRS net profit of RMB32.303 billion.

Related News: HSBC Global Research Trims TENCENT (00700.HK) TP to $655; Rated Buy

Source: AAStocks Financial News

vested

Tencent makes great strides in chips, cloud

China's tech giant Tencent Holdings (0700) touted progress in semiconductor chip development and investment yesterday, offering a rare public glimpse of its R&D initiatives.

He highlighted three chips developed by Tencent. These are a chip for AI computing called Zixiao, another for video processing, known as Canghai, and a chip for high-performance networks that is designated Xuanling.

The company also announced its Orca cloud operating system.

The comments come after Chinese e-commerce giant Alibaba (9988), a Tencent competitor in China's market for cloud computing, unveiled a new server chip for data centres last month.

Chinese smartphone maker Xiaomi (1810) unveiled its Surge 1 chip for image processing in phone cameras this year.

Source: The Standard

https://www.thestandard.com.hk/section- ... ips,-cloud

vested

Tencent’s third-quarter profits up 3 per cent, its slowest growth in two years amid regulatory crackdown, gaming licence freeze

The Hong Kong-listed Chinese internet giant reported net profit of 39.5 billion yuan in the quarter ended September

by Iris Deng

Tencent Holdings reported a 3 per cent increase in profits in the third quarter of 2021, its slowest growth in two years.

Posted a net profit of 39.5 billion yuan (US$6.18 billion) in the quarter ended September, up from 38.54 billion yuan in the same period last year, beating estimates of 32.6 billion yuan.

Revenue increased 13 per cent to 142.37 billion yuan, up from 125.4 billion yuan a year ago, but below the 145.41 billion yuan consensus estimate by 28 analysts.

Domestic games revenues grew by 5 per cent to 33.6 billion yuan.

International games revenues grew by 20 per cent to 11.3 billion yuan.

Tencent’s fintech and business services revenue rose 30 per cent to 43.3 billion yuan, bolstered by increased transactions and the expansion of its cloud business.

Source: SCMP

https://www.scmp.com/tech/big-tech/arti ... 9afd96b864

vested

Tencent net up, but sales hit new low amid clamp

Sales growth decelerated for a sixth straight quarter and reached the slowest pace since it went public in 2004.

Online advertising rose a slower-than-expected 5 percent, in part because of weakness in the education, insurance and gaming sectors.

Source: The Standard

https://www.thestandard.com.hk/section- ... amid-clamp

vested

Another Tencent bear emerges as competition clouds earnings while regulatory concerns are still playing out

Yang at Blue Lotus Capital becomes the second bear on Tencent since Muhl at DZ Bank downgraded the stock to a sell in August

Analysts have trimmed their price targets for Tencent shares by 21 per cent over the past six months, as company readies its third-quarter report

by Cheryl Heng

Yang has a price target of HK$446 for Tencent shares, compared with the consensus of HK$625.74.

Source: SCMP

https://www.scmp.com/business/markets/a ... e=homepage

vested

Tencent Holdings (700 HK)
3Q21: Commendable Results Despite Challenging Environment

Tencent’s 3Q21 results were slightly below street estimates.

Revenue grew by 13.5% yoy to Rmb142.4b, broadly in line with consensus’ estimates.

Gross profit grew by 10.8% yoy to Rmb62.7b, with gross margin coming in at 44.1%, down 1.1ppt yoy on higher transaction processing cost and server cost.

Non-GAAP net profit contracted 1.7% yoy to Rmb31.8b, 2% below street estimates.

Non-GAAP net margin was 22.3%, down by 3.4ppt yoy, in line with consensus’ estimates.

Maintain BUY with lower target price to HK$557.00.

Source: UOBKH

https://research.uobkayhian.com/content ... 190ff550ca

TENCENT HOLDINGS (700 HK) - SOFTER AD OUTLOOK; ENCOURAGING REGULATORY PERSPECTIVES

Recommendation : BUY
Fair Value : HKD 605.00

SOFTER AD OUTLOOK; ENCOURAGING REGULATORY PERSPECTIVES.

Advertising weakness to drag beyond the quarter but unlikely to be structural
Multiple pathways to capture opportunities relating to the Metaverse
Encouraging comments on gaming regulatory outlook; FV of HKD605

Tencent is a leading internet company in China, and it remains well-positioned to capture and monetize significant opportunities in China’s mobile internet growth story with its comprehensive ecosystem that ranges from games to social networks.

The group is also focused on its Industrial Internet strategy, which will allow it to export key capabilities amassed from its consumption internet business to its enterprise clients (2B).

Source: OCBC

vested

Tencent Holdings – Persistent short-term regulatory overhang to weigh on share price.
(700 HK/BUY/HK$459.40/Target:HK$557.00)

Tencent has tumbled about 42% since its peak in Feb 21 as the current regulatory environment remains unfavourable towards it.

We believe Tencent’s overseas games, unique position in the metaverse, opportunity to monetise the Wexin ecosystem and SaaS+Cloud will continue to anchor its long-term growth.

However, we think the whole internet sector’s valuation will remain pressured under the government’s structural regulatory transformation pledge.

Maintain BUY. Target price: HK$557.00

Source: UOBKH