Tencent 0700 03 (Aug 18 - Sep 21)

[winston]

vested

July 15, 2020

<Research Report>Citi Lifts TENCENT (00700.HK) TP to $649; 2Q20 Revenue May Grow Nearly 24%

TENCENT (00700.HK) anticipated for solid 2Q20 results, with revenue growing 23.9% YoY to RMB110 billion.

Citigroup modeled TENCENT's non-GAAP net profit at RMB27.13 billion (+24.6% YoY) in 2Q20.

However, some factors riding on 1Q lockdown (e.g. online games and social ad revenue) may turn adverse for the giant in 2Q.

TENCENT was kept at Buy, with target raised from $530 to $649.

Source: AAStocks Financial News

[winston]

vested


Some analysts point out that WeChat has about 1.2 billion monthly active users worldwide, among which 200 to 300 million are active users overseas and 20 to 25 percent of which are from America. This means Trump's order will affect only 75 million users at the most, they argue.

But is this really the case?

To begin with, these figures are based on the assumption that no other country will follow America's lead. If they do, the number of affected users could be as high as 200 million to 300 million.

Moreover, WeChat Pay, the payment system of WeChat, will also be affected, and most investors do not seem to have taken this into account.

Source: Andrew Wong, The Standard

[winston]

not vested

Tencent Holdings (700 HK) - A picture of overall calm

Tencent’s 2Q20 results came in above expectations.

Revenue rose 26% YoY to RMB 114.9b, coming in above consensus by 2%.

Gross margins (GPM) across all 3 segments improved YoY by 220 bps, leading to a blended GPM of 46.3%.

Non-GAAP net profit grew 28% YoY to RMB 30.2b, or ~3% above consensus.

On mobile gaming, while user time spent on mobile games in China has normalised on a QoQ basis, management noted that this is still a YoY increase, and the audience for these games has structurally expanded as a result of Covid-19.

While the delayed DnF Mobile launch in China is disappointing, we believe that management is working to bring this to market quickly.

Management remains committed to its long-term overseas ambitions in mobile gaming.

Shiping Hao (short-form video platform) has received positive feedback thus far, while Mini Store can help facilitate greater adoption of Mini Programmes by retailers, which would hopefully translate into greater ad spend in the future.

While seeking further clarification, management’s read of the situation is that the EO is focused on WeChat in the US and not other businesses in the US.

This is in-line with our base case. Following adjustments, our FV increases from HK$525 to HK$619. Maintain BUY.

Source: OCBC

[winston]

not vested

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

Brokers│Ratings│TPs (HK$)
Nomura│Buy│655
Jefferies│Buy│651
UBS│Buy│650
HSBC Global Research│Buy│635->655
Citigroup│Buy│649
Credit Suisse│Outperform│641
BOCOM International│Buy│604->627
Macquarie│Outperform│626
Daiwa│Buy│610->620
BofA Securities│Buy│612->606
Goldman Sachs│Buy│556->601
JPMorgan│Overweight│600
Morgan Stanley│Overweight│500->570
------------------------------

Data
Last Update: 2020/08/13 13:06
TENCENT
Cumulative performance
YTD +36.18%
-5.45% 1-Month
Data
Last Update: 2020/08/13 13:01
E-Commerce & Internet Services
Industry average cumulative performance
YTD +19.57%
1-Month +4.16%

Brokers│Views
Nomura│Result beat driven by mobile game biz strength
Jefferies│Growth driven by game strength
UBS│Fundamentals strong; near-term price affected by geopolitical uncertainty
HSBC Global Research│Core games, payment & ad biz as interim result drivers
Citigroup│Solid growth driven by strengthened content ecosystem, ad tech
Credit Suisse│QoQ result beat driven by game biz; structural biz still driver
BOCOM International│QoQ result strong, outlook solid; limited US sanction impact
Macquarie│Result largely in-line
Daiwa│Mobile games surprising; social ad growth normalizing
BofA Securities│Strategy little changed; ecosystem partner value strengthened
Goldman Sachs│QoQ result solid; kept Buy
JPMorgan│All biz departments post result beat
Morgan Stanley│Mobile games still spotlight

Source: AAStocks Financial News

[winston]

Tencent is a Tech ETF and a Venture Fund combined, not just a super app

by Alvin Chow

Source: Dr Wealth

https://www.drwealth.com/tencent-is-a-t ... super-app/

[winston]

not vested

<Research Report>Nomura: TENCENT's Mini Programs To Boost E-commerce Ecosystem; TP $655

TENCENT (00700.HK)'s mini programs can strengthen its e-commerce ecosystem, opined Nomura.

Total transaction volume surged by 160% YoY to RMB800 billion in 2019.

Mini programs have become a top-pick platform with over 400 million of daily active users.

TENCENT was kept at Buy, with a target of $655.

Source: AAStocks Financial News

[winston]

not vested

TENCENT(700)

Analysis：

Tencent (700.HK) has a number of good news recently, including


1) the US Court of Appeals rejected the Department of Justice`s request to immediately delist WeChat


2) its game "Moonlight Blade" (天涯明月刀), which was launched on October 16th, has a gross billing of approximately USD 50 million in the first week, breaking the previous record set by "Perfect World" (完美世界手遊版).

In addition, the company is expected to launch two blockbuster games in the second half of the year, including "DnF" and " League of Legends：Wild Rift". Among them, " League of Legends：Wild Rift" was launched on October 27 in multiple regions for beta testing.

At present, these two games are highly anticipated by players from all over the world. We believe that these two games will become ! the main growth drivers for the company in short-to-medium term.

Strategy：
Buy-in Price: $585, Target Price: $640, Cut Loss Price: $555

Source: Phillips

[winston]

not vested

<Research Report>Ratings, TPs on TENCENT (00700.HK) (Table) (Update)

Ahead of TENCENT (00700.HK)’s 3Q20 results release slated for Thursday (12 November), brokers assumed net profit in a range of RMB25.979-33.79 billion, up 27.5-65.8% yearly, according to the forecast compiled by our reporters.

Brokers│Investment Ratings│TPs ($)
Macquarie│Outperform│815
Daiwa│Buy│620->720
Nomura│Buy│703
HSBC Global Research│Buy│687
Credit Suisse│Outperform│683
Goldman Sachs│Buy│678
Jefferies│Buy│651
Morgan Stanley│Overweight│650
UBS│Buy│650
Citigroup│Buy│649
BofA Securities│Buy│624
JPMorgan│Overweight│620
Haitong International│Outperform│605
BNP Paribas│Hold│600
CICC│Neutral│541

Source: AAStocks Financial News

[winston]

Tencent Q3 profit shoots up 89pc to 38b yuan

Basic earnings per share were 4.059 yuan, but the tech giant did not declare an interim dividend. XINHUA

Tencent's (0700) third-quarter net profit skyrocketed 89 percent year-on-year to 38.54 billion yuan (HK$45.09 billion), surpassing market expectations.

Non-IFRS net profit in the third quarter meanwhile surged 32 percent year-on-year to 32.3 billion yuan (HK$37.8 billion).

Third-quarter revenues were up 29 percent to 125.45 billion yuan from a year before.

Basic earnings per share were 4.059 yuan, but no interim dividend was declared.

In the third quarter, revenue from value-added services increased 37.87 percent year-on-year to 69.8 billion yuan.

Online games revenues grew by 45 percent to 41.42 billion yuan while revenues from fintech and business services increased by 24.28 percent to 33.26 billion yuan.

Revenues from online advertising increased by 16.25 percent to 21.35 billion yuan.

The Chinese gaming and social-media giant's shares had ended 4.7 percent higher at HK$577 ahead of the results.

Source: The Standard

https://www.thestandard.com.hk/breaking ... o-38b-yuan

[winston]

vested

Tencent profit skyrockets 89pc to 38b yuan on games boom

by Winnie Lee

Tencent's (0700) net profit rose 89 percent year-on-year to 38.54 billion yuan (HK$45.1 billion) in the third quarter, beating market expectations, as its revenues from games soared.

Its non-IFRS net profit in the third quarter surged 32 percent year-on-year to 32.3 billion yuan.

Basic earnings per share were 4.059 yuan.

"Games were way ahead of expectations. This is important as it is the most profitable part of the business within Tencent," Daiwa Capital Markets analyst John Choi said.

Third-quarter revenue soared 29 percent to 125.45 billion yuan from a year before, and revenue from value-added services increased by 37.87 percent year-on-year to 69.8 billion yuan.

Online game revenues grew by 45 percent year-on-year to 41.42 billion yuan, mainly driven by the revenue growth of domestic titles such as Peacekeeper Elite and Honour of Kings, as well as overseas titles.

Revenues from fintech and business services increased by 24.28 percent to 33.26 billion yuan in the third quarter from a year before, mainly due to higher revenues from commercial payment and wealth management, while business services revenue growth slowed down.

Revenues from online advertising increased by 16.25 percent to 21.35 billion yuan from a year ago, benefitting from wider adoption of algorithmic advertisement buying solutions, as well as rapid demand growth from categories such as education, internet services and e-commerce platforms, and recovered demand from sectors such as real estate and automobiles.

Social and others advertising revenues grew by 21 percent to 17.75 billion yuan, primarily driven by higher revenues flowing from Weixin Moments, as well as revenue growth from its mobile advertising network benefitting from higher eCPMs as advertisers responded favorably to video format advertisements, it said.

Media advertising revenues fell 1 percent to 3.6 billion million.

Tencent said cloud and other business services revenue were affected by the lingering impact of the pandemic, causing delays in project deployment and new contract sign-ups, as well as by non-recurring adjustments to certain IaaS contracts.

Tencent also said the clamp on internet micro-lending would not have much on an impact on its fintech business.

Source: The Standard

https://www.thestandard.com.hk/section- ... games-boom