Tencent 0700 03 (Aug 18 - Sep 21)

[winston]

Tencent Pilots 'Double Reduction & Crackdown' Steps in 'King of Glory', Bars Minors Below 12 from In-game Spending

TENCENT (00700.HK) is rolling out new measures for "double reduction and double clampdown", banning minors aged below 12 to spend money on games, reported Chinese media.

The giant will pilot the "double reduction, double clampdown and triple promotion" steps on "King of Glory" and gradually expand the scope to cover its entire gaming portfolio, according to sources.

A screen time limit even stricter than policy requirement will be imposed on underage gamers. Specifically, their playtime will be lowered from 1.5 hours to 1 hour on weekdays, and from 3 hours to 2 hours on holidays or weekends.

All minors under 12 (i.e. primary school students) are forbidden from in-game spending.

Source: AAStocks Financial News

[winston]

vested

Tencent – Compelling risk/reward – Buy, adding to CL.

Tencent is executing on its strategy to narrow the holdco discount by acquiring assets that result in higher earnings, as per their plans earlier this year, with funding of these investments from its multi-billion dollar exits.

The stock has dropped 43% from 52-week highs, putting its 12m forward P/E at 21x (16x, ex-investments), from 33x (26x, ex-investments) in 1Q, reflecting a c.51% holdco discount, and an extreme 2 std dev below its historical average.

In our view, risk-reward is the most attractive in multiple years.

Longer term, we revise down our 2021E-23E revenue forecasts by 3-5% mainly on tightening regulations on content, ads and Fintech, as well as delayed launching timeline of blockbuster games and conservatively assume that Tencent forgoes the entire c. 6% of total gross gaming receipts from gamers below age 18.

We increase our holdco discount from 10% to 15% to reflect the regulatory headwind in the broader internet space.

Our 12m TP is now at HK$759 and in light of the stacked risk-reward with 73% upside and committed investments toward long-term growth, we reiterate our Buy rating on Tencent and add it to our Conviction List.

Source: GS

[behappyalways]

Tencent narrows kids’ playing time on video games labelled ‘spiritual opium’ by Chinese state media
https://www.youtube.com/watch?v=C4kgIbmL1i4

[winston]

Tencent targeted for ‘public interest litigation’ by Beijing procuratorate over alleged WeChat violations

Haidian District People’s Procuratorate says it has found that the youth mode of WeChat has certain violations, hurting the ‘legal interests of minors’

This is the first time that a Chinese procuratorate has targeted a Big Tech firm in this way and could mark a serious legal threat to Tencent

by Jane Zhang and Zhou Xin

Source: SCMP

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

[winston]

vested

Tencent’s fintech outshines gaming in revenue growth as company beats expectations amid regulatory uncertainty

The Hong Kong-listed company reported a profit of US$6.6 billion in the quarter ended June

by Iris Deng and Josh Ye

Tencent Holdings posted a 29 per cent rise in second-quarter profit.

Revenue reached 138.26 billion yuan, up 20 per cent compared with 114.9 billion yuan for the same quarter last year, higher than an earlier consensus estimate of 138.2 billion yuan.

Fintech and business services increased to 41.9 billion yuan, up 40 per cent year on year.

Social and other advertising revenues jumped 28 per cent to 19.5 billion yuan.

WeChat monthly active users reached 1.25 billion, up 3.8 per cent from the same quarter last year.

Video games revenue, traditionally a strong revenue driver for the company, rose 12 per cent to 43 billion yuan, with smartphone games accounting for 40.8 billion yuan, up 13 per cent over last year.

Tencent said that players under 16 accounted for just 2.6 per cent of China gross game receipts and those under 12 just 0.3 per cent.

Source: SCMP

https://www.scmp.com/tech/big-tech/arti ... c277a20e87

[winston]

vested

Tencent profit surges 46pc to 90.35b yuan

by Victor Zhong

Tencent (0700) posted a 46 percent growth in first-half net profit at 90.35 billion yuan (HK$108.56 billion) year-on-year.

Revenue jumped 20 percent to 138.3 billion yuan with sales from mobile games up 13 percent.

Source: The Standard

https://www.thestandard.com.hk/section- ... 0.35b-yuan

[winston]

vested

Tencent - BUY (Domestic games and ads may slow)

Tencent 2Q21 results were in line.

Total revenue grew 20% YoY to Rmb138.3bn, 1% above estimate.

Adjusted Ebit rose 13.7% YoY to Rmb42.8bn, 5% above estimate.

Soft domestic games growth was partly offset by stronger international growth.

Solid ad revenue growth continued, boosted by mini program and Moments;

Ffintech benefited from strong payment transactions.

Games and ad growth will likely slow further in 3Q21, offset by stronger fintech growth.

We keep a BUY but cut our target price from HK$826 to HK$780, mostly on lower market value of investees, and cut 2021/22 adjusted net earnings estimates 1.2/0.7%.

Source: CLSA

[winston]

vested

Tencent – 2Q21 results first take – CL Buy.

Tencent reported an in-line set of 2Q21 results with revenue and net profit both within 1% of our forecasts, though EPS was 7.8% ahead of consensus.

Mobile game revenue +13% yoy to Rmb40.8bn vs. GSe 41.3bn, due to the strong performance of flagship titles Honour of Kings (HoK), PUBG Mobile, Clash of Clans and Moonlight Blade Mobile, partly offset by the decrease in revenues from Peacekeeper Elite.

Tencent highlighted its endeavors to protect minors recently, including stricter-than-regulation game time and spending limits.

Online advertising revenue came in 3% ahead of GSe, driven by rising demands from Internet services and consumer staples, as well as consolidation of BitAuto’s advertising revenue, while dragged by weakness in education. 12m TP of HK$759.

Source: GS

[winston]

vested

Tencent Holdings (0700.HK) - 2Q21 Revenue In-line, Profit Beat; Smartphone Games +13% YoY and Social Ad +28% YoY

2Q21 results came in with total revenue of Rmb138.3bn (+20% yoy and +2% qoq), 1.9%/0% above Citi/cons. of Rmb135.7bn/Rmb138.3bn respectively.

Driven by 7% out-performance of PC games (Rmb11bn) vs. our estimates (Rmb10.28bn).

Online ads (+23% yoy to Rmb22.8bn), and fintech and business services (+40% yoy to Rmb41.9bn), came largely in-line with our estimates.

Surprisingly, smartphone games that grew 13% yoy to Rmb40.8bn, was 3% below our estimates of Rmb42.1bn, and other revenue of Rmb1.52bn was below our estimate of Rmb2bn.

Non-GAAP NP of Rmb34.04bn (+13% yoy and +3% qoq) beat our est. of Rmb32.4bn by 5% and consensus of Rmb32.8bn by 3.7%.

This higher profit vs. our estimate was attributable to higher revenue, and higher GPM, partially offset by higher G&A.

Non-GAAP EPS was Rmb3.504 vs. our est. of Rmb3.346/cons of Rmb3.443.

Non-GAAP Op was +13.7% yoy to Rmb42.80bn (31% margin), beat our margin estimate of 27.9%.

Source: Citi

[winston]

vested

Tencent Holdings (700 HK)
2Q21: In-line results. More Regulations To Come; New Initiatives Seeing Encouraging Progress

Tencent’s 2Q21 results were largely in line with street estimate.

Revenue rose 20% yoy to Rmb138.3b, in line with our and consensus estimates.

Gross profit was Rmb62.7b, up 18% yoy, with gross margin of 45.4%, down 0.9ppt yoy on higher content cost and bank charges.

Non-GAAP net profit grew 12.9% yoy to Rmb34b, 3.7% higher than street estimate.

Non-GAAP net profit margin was 24.6%, down 1.6ppt yoy, 0.9ppt above consensus estimates.

Maintain BUY. Lower target price to HK$535.00.

Source: UOBKH

https://research.uobkayhian.com/content ... 5656bbb953