Tencent 0700 03 (Aug 18 - Sep 21)

[winston]

not vested

Brokers' Post-result Ratings, TPs, Views on TENCENT (00700.HK) (Table)

Brokers│Ratings│TPs (HKD)
Citigroup│Buy│772
Goldman Sachs │Buy(Conviction Buy List)│759
China Renaissance│Buy│725
Morgan Stanley│Overweight│720
Daiwa│Buy│820->700
UBS│Buy│700->650
Nomura│Buy│698
Jefferies│Buy│683
Credit Suisse │Outperform│750->680
CMB International│Buy│753->640
JPMorgan│Overweight│710->640
BOC International│Buy│780->588

Brokers│Views
Citigroup│2Q revenue in line; earnings beat
Goldman Sachs │Quarterly results solid and in line
China Renaissance│2Q revenue in line; earnings beat slightly
Morgan Stanley│Quarterly revenue beats; gross profit satisfactory
Daiwa│To face challenge in 2H as gaming and advertising businesses face headwinds in near-term
UBS│Overall quarterly results solid but regulatory risks still linger
Nomura│Quarterly results in line
Jefferies│Focuses on long-term value creation
Credit Suisse │2Q results solid; structural drivers intact
CMB International│Awaits clearer regulation details
JPMorgan│2H financial outlook to further weaken
BOC International│Earnings beat; but valuation faces uncertainties

Source: AAStocks Financial News

[winston]

vested

2Q21 results generally in line; time to be positive but regulations remain an overhang

Tencent released its 1H21 results yesterday, which were generally in line with market
expectations.

Online ads, and Fintech & Cloud were the top-line growth drivers

Management expects more regulations in the near term from the Chinese government,
whose goal is to foster the long-term sustainable development of the Internet industry,
which will benefit Tencent.

We lowered our forecasts to reflect potential regulatory headwinds and slower
economic activity.

Regulation remains an overhang and may continue to create selling pressure for
Tencent. But we believe that it may be time to be positive for long-term investors.

Reiterate ADD with a new DCF-based target price of HK$528.1 (down from HK$677.1),
as we factored in slower revenue growth and higher costs, such as the tax rate.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 3703B5C3A3

[behappyalways]

Tencent: Tech Giant Behind Videogame Favorites Faces Beijing’s Scrutiny | WSJ
https://www.youtube.com/watch?v=DZ-JZgddZaM

[winston]

not vested

Key Beneficiary Of Future Metaverse Ecosystem

Tencent has rebounded almost 25% since its low in Aug 21, reflecting that the
impact of the regulatory changes has been priced in at the current stage.

Although Tencent is still facing the trough regulation environment, including cybersecurity, under-aged user protection and the antitrust regulations storm, we believe Tencent’s overseas games, unique position in the metaverse, WeChat+QQ ecosystem and SaaS+Cloud still have strong product advantages.

We maintain BUY with a higher target price of HK$588.00.

VALUATION/RECOMMENDATION

Maintain BUY, with target price of HK$588.00.

Considering the increasing investment, potential tax hike and the rectification of open-screen ads and online education ads, we believe the company’s short-term earnings growth will be under pressure, but upward growth should be sustained in
the medium to long term.

We raise our SOTP-based target price to HK$588.00 (from HK$535.00 after incorporating higher multiples in our SOTP valuation).

The company is now trading at 26x 12-month forward PE, around 1SD below
historical average.

Source: UOBKH

https://research.uobkayhian.com/content ... e63e3b6729

[winston]

vested

CITIC Securities: TENCENT Ad Biz to Be Dented by Regulation; Game R&D Cycle to Extend

TENCENT (00700.HK)'s core businesses across different segments remain solid at the moment, despite facing multiple challenges from Chinese regulatory departments in various aspects, including data security protection, minor protection and anti-addiction system in games, reported CITIC Securities.

CITIC Securities forecast the company's near-term earnings growth to come under pressure, considering the impact on ad business from the company's increased investment, potential change in tax concession for game companies, government rectification on mobile app advertisement and the new "data security law".

The broker, nonetheless, sees sustainable room for upside in mid to long-term for TENCENT, and maintained the Buy rating for the company with a target price of $613.

M Stanley Cites TENCENT: Never Discusses Gaming Consumption Tax Hike; Keeps Launching New Titles

On another note, the broker added that, having to strengthen the relevant infrastructure of minor protection and anti-addiction, TENCENT's gaming products' R&D cycle is projected to lengthen, which may cause the ROE to decrease.

Source: AAStocks Financial News

[winston]

vested

TENCENT HOLDINGS (700 HK)

Recommendation : BUY
Fair Value : HKD 635.00

PUTTING LATEST DEVELOPMENTS INTO PERSPECTIVE.

Expect a short-term suspension of game approvals but not a repeat of the 2018 episode

Revenue exposure to those under 18 years old was ~6% of online game revenue from China as of 4Q20

Maintain FV of HKD635

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

[winston]

Tencent Actively Responds to Minors' Online Game Protection; Brokers See Charity Plan to Weigh 20% of Profits 5 Yrs Ahead

China's Internet sector oversight is affecting the tech behemoth TENCENT (00700.HK)
on multiple fronts, including tighter anti-indulgence policy supervision on games.

TENCENT is piloting gameplay and spending restrictions for Honor of Kings and Game for Peace, where minors are limited to play games for an hour a day on each non-statutory holiday and two hours per day on each statutory holiday.

Equally, gamers below 12 are banned from in-game spending.

In this way, TENCENT aims to crack down on impostor accounts and trading of adult accounts by third-party platforms.

On another note, BOCOM International expected China's common prosperity program to account for 20% of leading Internet companies' GAAP profits in the coming 4-5 years.

Source: AAStocks Financial News

[winston]

vested

JPM Sees TENCENT Game Risk Manageable; Stock May Range-bound Next 1-2 Qs

JP Morgan, after conducting an investor meeting with TENCENT (00700.HK)'s management last week, analyzed that the company's regulatory risk in online game business is manageable, and expected that the Personal Information Protection Law (PIPL) executed in China to have less severe impact on TENCENT than ad-focused industry peers.

In the management's opinion, opening up to more diverse services of other platforms will be beneficial to the group's ecosystem, while the guiding principle is to balance the product and user experience.

The tech giant highlighted that they have already opened up their platform to some of Alibaba’s businesses such as Taopiaopiao (internet ticketing service platform) and Hema (fresh food and groceries business).

Related News- M Stanley: CN Game Approval Delay Due to Anti-addiction Rules for Minors; Unlike 2018's Full Suspension

JP Morgan assumed the key share price booster in short term remains investor view on the regulatory environment in China's Internet industry.

The broker expected the stock to be range-bound in the next 1-2 quarters.

The rating was kept at Overweight with target price of $640.

Source: AAStocks Financial News