Tencent 0700 03 (Aug 18 - Sep 21)

[winston]

not vested

<Research Report>Daiwa Upgrades TENCENT (00700.HK) to Buy on Attractive Risk-reward

TENCENT (00700.HK)'s price has corrected by 10% since the 1Q19 results announcement.

Daiwa believed the giant's mobile gaming revenue will bottom out in 2Q19, with relevant revenue growth re-accelerating in 2H19.

Based on current price level, the broker upgraded Tencent from Outperform to Buy on enticing risk-reward profile, with target cut from $435 to $425.

The 2019-21E revenues for Tencent were axed by 3-4%, as contribution from Peacekeeper Elite will diminish in 2Q19 along with weak ad revenue growth outlook this year.

Source: AAStocks Financial News

[winston]

not vested

Aug 8, 2019


Tencent Holdings seeks to borrow US$5b

The company is in talks with banks for a five-year club loan with a price talk for the margin in the area of 80 basis points over Libor.

Tencent last came to the loan market in 2017, according to Bloomberg data, when it raised US$4.65 billion via a five-year syndicated facility at a margin of 95 basis points over Libor.

Source: The Standard

http://www.thestandard.com.hk/breaking- ... 0808&sid=2

[winston]

not vested

Tencent posts better than expected 2Q profit

Source: SCMP

https://www.scmp.com/tech/big-tech/arti ... ter-profit

[winston]

not vested

Tencent net jumps 17pc to 44b yuan

by Tereza Cai

Mainland tech giant Tencent's (0700) Non-GAAP net profit jumped 17 percent year-on-year to 44.46 billion yuan (HK$49.71 billion) for the six months ended June 30, beating the market consensus of 44 billion yuan, without an interim dividend.

Tencent's ADR was trading 4.15 percent lower at US$41.56 as of 10pm last night.

The second-quarter non-GAAP net profit amounted to 23.5 billion yuan, up 19.7 percent year-on-year and up 12 percent as compared with the first quarter this year.

It is 3 percent higher than the consensus as a result of better-than-expected other income segments, according to Ken Chong, equity associate at Jefferies Hong Kong.

Basic earnings per share rose 35 percent to 2.550 yuan, while under non-GAAP accounting policies, basic earnings rose 19 percent to 2.486 yuan.

Total revenue grew 21 percent year-on-year to 88.8 billion yuan for the three months from April to June, 5 percent below consensus, with 54 percent contributed by value-added services.

The VAS subscriptions grew 10 percent from a year ago to 168.9 billion. Tencent Video subscription counts were 96.9 million, up 30 percent year-on-year. Revenue from this segment rose 14 percent year-on-year to 48.08 billion yuan for the second quarter, but down 2 percent as compared with the first quarter.

The company said it will leverage its affluent intellectual property and content creation platform, with partnerships of China Literature (0772) and Tencent games, to develop the videos business.

Online games revenues grew 18 percent year-on-year to 27.31 billion yuan. The increase was primarily due to revenue growth from smartphone games, which was up 26 percent year-on-year to 22.2 billion yuan, in line with Jefferies Hong Kong's estimates.

Despite increased cash receipts, PC games revenue was down 15 percent quarter-on-quarter due to weak seasonality in the second quarter and declined by 9 percent year-on-year to 11.7 billion yuan, 7 percent behind Jefferies Hong Kong's estimates.

About 26 percent of the total revenue for the three months ended June 30 were from fintech and business services, whose revenue rose 37 percent from last year to 22.9 billion yuan, 4 percent behind Jefferies Hong Kong estimates, while 18 percent were from online advertising, which grew 16 percent year-on-year to 16.4 billion yuan in revenue, 3 percent short of Jefferies Hong Kong estimates.

Source: The Standard

http://www.thestandard.com.hk/section-n ... 0815&sid=2

[winston]

vested

Tencent Holdings: Better gaming prospects ahead

Tencent Holdings (Tencent; 700 HK) 2Q19 results were broadly under expectations.

Revenue rose 21% YoY to RMB 88.8b, but slower than consensus’ expectations.

Media revenue was weak with delays to the airing of certain top-tier drama series, while FinTech and Business Services saw grew at a slower clip.

Still, opex control was strong, partially contributing to non-GAAP PATMI rising 19.3% to RMB 23.5b, beating consensus by 2.7%.

Management is of the view that the macro environment will remain difficult for the rest of 2019, with the heavy supply of advertising across the industry extending potentially in 2020.

Still, we remain constructive on the outlook for mobile games (25.0% of 2Q19 revenue), especially with the margin contribution by Peacekeeper Elite in 2Q19.

Management remained upbeat about the long-term prospects of its cloud business, noting its recent share gain, and strides in the SaaS space.

Based on our SOTP valuation, and with a DCF approach (4.25% terminal growth) to Tencent’s core business, we derive a FV of HK$403.

Source: OCBC

[winston]

not vested

<Blue Chip Results>TENCENT Interim NP Leaps 24.8% to RMB51.346B, Near Upper End of Estimate

TENCENT (00700.HK) announced its interim results for the six months ended June 30th 2019, during which net profit elevated 24.76% year-on-year to RMB51.346 billion with EPS RMB5.427, which is near the upper end of estimate.

During the period, income climbed 18.4% year-on-year to RMB174.286 billion. EBITDA rose 18.97% to RMB66.215 billion.

For the second quarter, net profit gathered 35.09% year-on-year to RMB24.136 billion with EPS RMB2.55. Income went up 20.56% yearly to RMB88.821 billion. EBITDA slid 2.73% to RMB32.649 billion.

Total number of active accounts of Weixin and Wechat as at end of June 2019 was 1.133 billion, up 75 million from same period of last year.

Source: AAStocks Financial News

[winston]

vested

<Research Report>Citi Axes TENCENT (00700.HK) TP to $429 on Disappointing 2Q Revenue

Citigroup reiterated TENCENT (00700.HK) at Buy, with target cut from $441 to $429.

The giant's 2020E non-GAAP EPS was lowered from $14.69 to $14.312.

Tencent's mobile gaming momentum was insufficient to offset the slowdown in advertising business, along with disappointing 2Q19 revenue which came as no surprise to the broker.

The broker revised Tencent's 2019-21 non-GAAP diluted EPS forecast by +1.2%/-0.9%/+0.8% to RMB9.98/RMB12.6/RMB16.71.

Source: AAStocks Financial News

[winston]

vested

Tencent Holdings (700 HK)
2Q19: Soft top-line Growth; Margins Continued To Recover, Strong Deferred revenue growth

Tencent reported mixed 2Q19 results.

Revenue grew 21% yoy, missing consensus by 5%.

Non-GAAP net income increased 19% yoy, 3% ahead of consensus.

Gross margin shrank 2.7ppt yoy to 44.1% due to higher contribution from FinTech and cloud
business, and is in line with consensus estimates of 44.6%.

Non-GAAP EPS of Rmb2.46 was up 19% yoy.

We maintain BUY, with a lower target price of HK$423.00 (from HK$437.00).

Source: UOBKH

https://research.uobkayhian.com/content ... 663b6eee16

[winston]

vested

Brokers│Investment Ratings│Target Prices (HK$)
JPMorgan│Overweight│460->450
Jefferies│Buy│455.3
Haitong International│Buy│470->455
UBS│Buy│450->440
Bank of America Merrill Lynch│Buy│445->433
Morgan Stanley│Overweight│430
Citigroup│Buy│441->429
Nomura│Buy│430->428
UOB Kay Hian│Buy│437->423
Daiwa│Buy│425->420
Goldman Sachs│Buy│418->415
CICC│Neutral│370->342

Brokers│Views
JPMorgan│Difference in sector performance more significant than expected
Jefferies│2Q19 revenue misses; non-GAAP beats
Haitong International│Online game solid enough to offset advertising uncertainty
UBS│Takes more time for growth recovery; investment factors largely unaffected
Bank of America Merrill Lynch│Business trend largely in-line, edges boosted by content, technology
Morgan Stanley│OPEX control effective to deal with weak sales growth
Citigroup│Mobile game momentum not robust enough to offset feeble advertising
Nomura│Long-term growth potential unchanged
UOB Kay Hian│Gross margin recovers
Daiwa│Mobile business back on track; cost control improves
Goldman Sachs│2Q19 results beat; social media advertising, mobile game growth resilient
CICC│Sees bulging pressures in 2H19, 2020 advertising revenue

Source: AAstocks.com

[winston]

vested

2Q19 topline missed on advertising growth, but games growing fast

2Q19 bottomline in line; but topline missed on lower than expected online advertising growth

Mobile games revenue back on a growth track from -2% y-o-y in 1Q19 to 25% in 2Q19; expect growth to accelerate in 2H19, driven by Peacekeeper Elite

Online ad revenue growth moderated from 25% yo-y in 1Q19 to 16% in 2Q19; but ad loads on Mini
Program to ramp up in 2H19

Reiterate BUY and TP of HK$466

Source: DBS

https://researchwise.dbsvresearch.com/R ... hdfakfhgbh