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Tencent Holdings $TCEHY - The most important stock in China plunged more than -10%
By: Jason Goepfert | December 22, 2023
• The most important stock in China plunged more than -10%.
That's one of the most remarkable moves ever for an 800-lb gorilla kind of stock.
Picking bottoms in Chinese tech has been nothing but a knee-hammer kind of thing for investors, but Tencent's reaction history is notable. $TCEHY
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Tencent (TCEHY) turns to ByteDance in gaming showdown with NetEase
By: Investing | December 18, 2023
HONG KONG (Reuters) - Tencent Holdings (OTC:TCEHY) is relying on one-time bitter rival ByteDance to promote its most important video game release in years, in a sign of warming relations as well as intensifying competition as China's gaming industry returns to growth.
Tencent released on Friday mobile party game "DreamStar" that it hopes to challenge "Eggy Party", a similar offering from NetEase (NASDAQ:NTES) which has become a surprise hit this year with 100 million monthly active users.
Analysts expect DreamStar to earn up to 6 billion yuan ($842 million) in its first year, while they forecast Eggy Party, which owes much of its success to advertising on ByteDance platforms, to earn 8 billion yuan for NetEase this year.
In a battle to defend its status as China's biggest gaming firm,Tencent has chosen to promote Dreamstar on ByteDance's popular advertising platforms despite the two's rancorous history in barring one another from their platforms.
About 38% of Tencent ads for DreamStar were put on ByteDance's online ad service Pangolin in the last 30 days, making it the top ad service Tencent has spent on for the game, according to data tracking firm DataEye.
Its decision to rely heavily on Pangolin is remarkable considering that Tencent has its own ad network and various promotion channels within its product ecosystem.
Tencent has put only 12% of DreamStar ads on its own ad network Youlianghui, according to DataEye.
The advertising layout is part of Tencent's plans for a 1.4 billion yuan investment to build out DreamStar's ecosystem to ensure its success.
That strategy has also seen Tencent begin to let video game live-streamers to stream on ByteDance platforms.
Zhang Daxian, China's top live-streamer who became famous through playing Tencent's "Honor of Kings" game, started his channel on a ByteDance platform earlier this month and previewed DreamStar, a scenario unthinkable to many fans just a year ago.
For years, Tencent and ByteDance were locked in a series of lawsuits against each other. In 2021, ByteDance sued Tencent for restricting users from sharing content from Douyin - TikTok's sister app in China - on Tencent's apps, citing anti-monopoly law.
In the same year, Tencent sued ByteDance for featuring footage of Honor of Kings on a ByteDance platform, citing copyright infringement.
The apparent thaw in their relationship comes as ByteDance recently decided to wind down its gaming business to focus on its core platform operations, marking a retreat from its competition with Tencent and NetEase in gaming.
China's video games market returned to growth this year as domestic revenue rose 13% to 303 billion yuan, putting Beijing's eight-month industry crackdown two years ago in the rear-view mirror.
($1 = 7.1255 Chinese yuan renminbi)
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Tencent launches party game 'DreamStar', analysts say poses a threat to NetEase
By: Investing | December 14, 2023
HONG KONG (Reuters) - Chinese tech giant Tencent Holdings (OTC:TCEHY) on Friday launched "DreamStar", a new party game that has been widely anticipated by users and pegged by analysts to pose a threat to domestic arch rival NetEase (NASDAQ:NTES).
"DreamStar", in which gamers play as cartoon characters to race in an obstacle course, is seen as Tencent's move to take on NetEase' massively popular game "Egg Party", a surprise hit which has helped lift NetEase shares by more than 40% this year.
JPMorgan analysts said in a note on Thursday that the launch of "DreamStar" could impact NetEase revenue by 2% to 3%. The bank also trimmed its forecast for NetEase revenue for the next two quarters by 4% and 5% respectively.
"Egg Party" is forecast to be on track to earn an annual revenue between 7 billion yuan and 8 billion yuan ($980 million and $1.1 billion) this year, according to a Goldman Sachs note.
As Tencent's answer to "Egg Party", Goldman expects "DreamStar" to earn between 5 billion and 6 billion yuan in its first year.
NetEase's market capitalisation reached $67 billion on Friday, a day after surpassing food delivery giant Meituan to become China's fourth-biggest internet company.
Tencent remains China's biggest internet company. It is the world's biggest video games provider and it operates China's leading social network app WeChat.
Tencent has been in search for new hit gaming titles as competition from other game developers like NetEase and miHoYo, producer of "Genshin Impact", intensifies. Tencent unveiled its most ambitious console title, "Last Sentinel", this month.
($1 = 7.1252 yuan)
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Tencent's Business Is Thriving And It Has Taken Precautions Against The U.S. Chip Export Curbs
By: Markets & Mayhem | November 21, 2023
Tencent Holdings Limited (OTC: TCEHY) posted impressive third quarter results last week. The world's largest video game company and operator of the WeChat messaging platform showed that the gaming segment rebounded from China’s tech regulatory crackdown, along with shining advertising sales. Earlier this month, Tencent revealed it made a deal with Meta Platforms (NASDAQ: META) to sell its VR headsets. This move will allow Meta to return to China and face Apple Inc (NASDAQ: AAPL) whose new mixed-reality headset Vision Pro should go on sale early next year.
Tencent’s Third Quarter Highlights
Tencent posted a revenue of 154.6 billion yuan which equates to about $21.4 billion, in line with estimates. This is Tencent’s third consecutive quarter of revenue growth.
Domestic games revenue rose 5%, driven by titles such as "Lost Ark" and "Valorant", which Tencent launched in July and for the first time in China.
Online advertising business reported revenue rose 20% on the back of strong demand for advertising in its video content. Over the recent quarter, e-commerce companies have "become a much bigger contributor to Tencent’s ad revenue. Tencent also noted that these companies tend to advertise in the second half of the year.
Tencent’s second-largest segment, financial technology business, also reported a 16% rise as wealth management services and online transactions improved.
Although third quarter margin continued to improve as it got closer to 50% with Tencent eliminating unprofitable business segments, net profit declined 9% to 36.1 billion yuan.
A Deal With Meta
As Wall Street reported earlier in the month, Meta signed a deal with Tencent to sell a new low-cost version of its virtual-reality (VR) headset in China as of late next year. This move marks Meta's return to a market where its platforms Facebook and Instagram are blocked. Besides returning to China after 14 years, Meta gets to compete with TikTok-owner Bytedance, which makes the VR headset Pico. Wall Street Jounral reported that Meta is planning to use lenses in the headset that are cheaper than those in the Quest 3 for the Chinese market...
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Tencent’s Record Buybacks Are Not Enough to End $43 Billion Rout
By: Markets & Mayhem | October 17, 2023
Tencent Holdings Ltd. has returned about $24 billion to shareholders via buybacks and dividends this year. But even that won’t convince investors that it’s due for a turnaround following a $42 billion market value wipeout.
Shares of the Chinese gaming company have fallen more than 27% since its January high, trailing the Hang Seng Tech Index despite it buying back more shares than any other firm in Hong Kong this year. Investors remain cautious that broad global selling of Chinese assets and a sputtering economy will remain key pressure points.
“That the stock has underperformed is really emblematic of the investor disillusionment with China,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Tencent stock can start outperforming only when investor confidence in China returns.”
In total, Tencent has spent $4 billion in buybacks and another $20 billion across cash dividends and distributed shares in food-delivery firm Meituan, according to Bloomberg calculations.
Shares of the company gained as much as 1.1% on Tuesday as Apple Inc.’s Tim Cook showed up at a Tencent gaming tournament in China, endorsing one of the biggest earners on the app store. It ended the Hong Kong session up 0.3%.
There are clear reasons why investors are concerned. Tencent’s fintech and business services segment, which accounts for about one-third of total revenue, likely grew at a slower pace last quarter as offline payment volumes were hit by slower retail sales, according to HSBC Holdings Plc’s Charlene Liu. The bank also trimmed its 2023 games revenue growth forecast given contribution from new launches may take longer to ramp up.
Still, optimism is slowly building among some analysts as Tencent shifts its business mix toward higher-margin segments such as mini-games and video accounts, while reducing exposure to its less profitable video-streaming business. The recent boost in share buybacks may also provide some price support even as its biggest shareholder trims its stake, according to Morgan Stanley.
Tencent’s forward earnings forecast is at a historic high and the company’s shares remain the most recommended in Asia. The stock has 67 buy recommendations and zero sell ratings, according to data compiled by Bloomberg...
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Tencent unveils Hunyuan foundation AI model for enterprises as public debut of internet giant's chatbot remains on hold
By: South China Morning Post | September 7, 2023
Chinese video gaming and social media giant Tencent Holdings has launched its foundation artificial intelligence (AI) model called Hunyuan, as the country's most valuable company bets on its vast ecosystem to help drive the adoption of more ChatGPT-like services across the mainland.
Hunyuan, a large language model (LLM) that has more than 100 billion parameters and been pre-trained with over 2 trillion tokens, is now available for enterprises in China to test and build apps via the company's cloud-computing arm Tencent Cloud, according to a Thursday announcement by Tencent vice-president Jiang Jie at the main forum of the company's 2023 Global Digital Ecosystem Summit in Shenzhen.
A foundation model is a deep-learning algorithm, trained on mountains of raw data from the internet, that can be adapted to accomplish tasks in various AI applications. An early example of a foundation AI model is the LLM GPT-3 used by ChatGPT creator OpenAI.
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Tencent's Hunyuan provides a range of functions, including image creation, copywriting and text recognition, that can be applied in multiple industries such as finance, social media, e-commerce and video gaming...
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Tencent Stock (TCEHY): Bear vs. Bull
By: Motley Fool | August 22, 2023
• The Chinese tech giant remains a divisive investment.
Tencent (TCEHY -1.17%) posted its second-quarter report on Aug. 16. The Chinese tech giant's revenue rose 11% year over year to 149.2 billion yuan ($20.6 billion) but missed analysts' estimates by 2.5 billion yuan. Its net profit grew 41% to 26.2 billion yuan ($3.6 billion), but also missed the consensus forecast by 7.3 billion yuan. Tencent's stock dipped slightly after the report, but it remains up 3% for the year.
Let's review the key numbers and see if the bulls or bears are likely to gain the upper hand in the period ahead.
The key numbers
During the second quarter, Tencent generated 50% of its revenue from its value-added services (VAS) business, which collects fees from its video games, social media apps, and streaming media platforms. Nearly 33% of its revenue came from its fintech and business services division, which houses its WeChat Pay digital payments platform, Tencent Cloud platform, and other enterprise-oriented services. The remaining 17% came from its online advertising business, which sells ads across all of its websites, apps, and streaming services. Here's how its three core businesses fared over the past year...
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Will Tencent Holdings (TCEHY) Regain Favor Among Investors?
By: Barchart | August 1, 2023
After plunging to a 6-year low in October 2022, Tencent Holdings Ltd (TCEHY) rallied to a 17-month high in January. However, the stock has since moved sideways as the company has fallen out of favor with Chinese investors.
According to Bloomberg data, onshore investors have sold Tencent Holding shares on a net basis for two months in a row (June-July) for the first time since 2021. Investors unloaded $375 million of Tencent shares in July through trading links between the Hong Kong, Shenzhen, and Shanghai exchanges.
Tencent Holdings, China’s most valuable company, has been weighed down by concerns about its outlook and selling by its largest shareholder. Beijing Eastern Smart Rock Asset Management said, despite the company still making money, it’s not a good time to buy Tencent Holdings, given that selling by its largest shareholder is weighing on the stock. Also, “Mainland investors all agree Tencent is cheap, but the price moves of 2022 have just proven that things can go quite extreme in the Hong Kong market.”
The upside momentum in Tencent Holdings has been hampered since June when Prosus NV, Tencent’s largest shareholder, announced that it was offloading its stake in the company. Chinese investors, who have supported Tencent holdings since it was listed in Hong Kong twenty years ago, have pulled back on their support for the stock. Since June, shares of Tencent Holdings are up by +15%, underperforming the Hang Seng Tech Index, which is up by +28%. Forsyth Barr Asia Ltd said investors may have moved out of Tencent to buy some higher beta names amid the recent risk-on sentiment in the China market.
The next test for Tencent Holdings will be its Q2 earnings report due in the middle of this month. There are signs that the company’s outlook is improving. Tencent is expected to report a +14% y/y increase in Q2 revenue due in part to solid gaming revenue growth. Analysts also remain optimistic about Tencent Holdings's prospects, as Bloomberg data shows that analysts have 70 buy ratings on the stock and just one sell rating.
Although most analysts remain upbeat on Tencent Holdings, some are cautioning that it may take time for the stock to recover. JPMorgan Chase said that while the company should deliver a “solid quarter,” it may take time for share prices to recover, given the weak sentiment. Also, Bloomberg Intelligence said, “While second-quarter numbers look to be in the bag for most Chinese Internet companies, including Tencent, we think expectations are still too high and see a risk China’s Internet companies could disappoint into the fourth quarter.”
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Tencent acquires Key parent company Visual Arts
By: Gematsu | July 27, 2023
Tencent has acquired Visual Arts, the parent company of AIR, Clannad, and Kanon developer Key, the companies announced.
Additionally, current Visual Arts CEO Takahiro Baba will step down and Genki Tenkumo (Okano Tohya) will become the new CEO.
“Visual Arts will remain Visual Arts, and the staff will continue to do the things it wants to do,” the company said in a statement.
According to Visual Arts, the acquisition will allow it to grow further and become a more global intellectual property owner.
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Alibaba, Tencent shares rise as investors bet China's tech crackdown is over
By: Investing.com | July 9, 2023
HONG KONG (Reuters) -Alibaba Group and Tencent shares rose in Hong Kong on Monday after China's $984 million fine against the Jack Ma-founded Ant Group appeared to signal the end of a regulatory crackdown on the country's technology sector.
Following the penalty on Friday, the Alibaba (NYSE:BABA) affiliate announced a share buyback that values the fintech a 75% discount to the valuation touted in an abandoned initial public offering (IPO) plan, but is seen as providing liquidity and certainty to investors.
The abrupt shelving of Ant's IPO in late 2020 had heralded the start of a wide-ranging clampdown by Beijing on industries ranging from technology to education, as regulators sought to assert their authority over what they deemed to be excesses and bad practices emerging from years of runaway growth.
The scrutiny left decades-old firms and startups alike operating in a new, uncertain environment and wiped billions off share prices, ensnaring companies from online retail giant Alibaba to gaming company Tencent and food delivery group Meituan.
Besides Ant, the Chinese authorities also announced on Friday they had fined Tencent's online payment platform Tenpay nearly 3 billion yuan ($414.88 million) for committing violations in areas such as customer data management.
The People's Bank of China (PBOC) said on Friday that most of the prominent problems for platform companies' financial businesses had been rectified and regulators would now shift their focus from focusing on specific companies to overall regulation of the industry.
Alibaba's Hong Kong-listed shares were up nearly 4% by 0230 GMT on Monday, outpacing a 1.3% gain for the broader market, while Tencent's shares were up 1%.
"Their share prices have strongly rebounded today mainly driven by the expectation that regulatory pressure from mainland government will ease," said Dickie Wong, Kingston Securities executive director.
ANT GROUP VALUATION SLASHED
Alibaba, which spun off Ant 11 years ago and has a 33% stake, said on Sunday it was considering whether to participate in the buyback.
Alibaba's U.S.-listed shares rose 8% on Friday after the penalty, one of the largest-ever fines for an internet company in China, was delivered.
Ant and its subsidiaries had violated laws and regulations in areas including corporate governance, financial consumer protection, payment and settlement business, as well as anti-money laundering obligations, the PBOC said.
Ant said on Saturday it proposed to all of its shareholders to repurchase up to 7.6% of its equity interest at a price that represents a group valuation of about $78.5 billion.
That compared to the $315 billion valuation in 2020 for what was set to be the world's largest IPO, had it not been derailed at the last minute by Chinese regulators.
The finalisation of Ant's penalty is seen as paving the way for the firm to secure a financial holding company licence, lift its growth rate and eventually revive its plans for a stock market listing.
However, analysts are questioning whether Ant will press ahead with a listing in the near future.
"According to the company, the reason for the buyback is providing liquidity to existing investors and attracting and retaining talented individuals through employee incentives," said Oshadhi Kumarasiri, a LightStream Research analyst who publishes on Smartkarma.
"Ant could have achieved both these objectives through an IPO....This means IPO is essentially put on hold."
($1 = 7.2310 Chinese yuan renminbi)
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Meta Platforms makes progress in talks with Tencent to sell Quest VR headset in China - WSJ
By: Investing.com | July 3, 2023
Meta Platforms (NASDAQ:META) has reportedly made progress with Tencent (OTC:TCEHY) on a virtual reality (VR) headset partnership, according to the Wall Street Journal.
The company held discussions with several Chinese tech companies after CEO Mark Zuckerberg questioned his firm’s China stance, asking if Apple (NASDAQ:AAPL) can sell iPhones in China, and Tesla (NASDAQ:TSLA) can sell cars, why can’t Meta sell its devices in one of the world’s largest markets?
Still, the company’s China push has hit multiple challenges, in part because Chinese executives worry that Zuckerberg isn’t seen as friendly to China.
Tencent (HK:0700) had its own concerns when it comes to partnering with Meta before Chairman Pony Ma decided to proceed with the negotiation. One of the challenges mentioned in the WSJ article is how Meta would roll out content in China, the people said.
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Tencent jumps on ChatGPT bandwagon by rolling out LLM for corporate clients, including state media
By: South China Morning Post | June 20, 2023
Chinese social media and gaming giant Tencent Holdings has launched its industry-oriented large language model (LLM) service aimed at a wide array of traditional sectors from finance to media, making it the latest of China's Big Tech firms to join the ChatGPT-frenzy.
The Shenzhen-based company's cloud arm launched its LLM as a model-as-a-service [MaaS] solution at a technical event held on Monday in Beijing, according to a post published to its official WeChat account.
LLMs are deep language learning models that respond to textual user prompts in a human-like fashion, and provide the technology underpinning for ChatGPT, the chat bot developed by Microsoft-backed start-up OpenAI.
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Tencent Cloud's LLM solutions will cater to industries ranging from finance, media, travel to education, with clients including China's state media China Media Group, the Shanghai University, and Fujian Big Data Group among others, according to the WeChat post.
Together with clients, the company has launched over 50 LLM-enabled industrial solutions covering over 10 industries, Tang Daosheng said at the event, a senior executive vice-president at Tencent and chief executive of its cloud and smart industries group.
"Tencent will keep opening its ecosystem to provide quality [LLM] services for corporate clients," said Tang, who added that the company will assist its clients in training multimodels and speed up exploration of applying LLMs in more industrial scenarios.
Tencent's foray into the local LLM arena will pit it against rivals including Baidu and Alibaba Group Holding, which are both looking to roll out their respective LLM applications for wider adoption among many businesses. Alibaba owns the Post.
ChatGPT's success has goaded global tech firms into an artificial intelligence (AI) arms race, with Chinese Big Tech firms falling over themselves to develop rival services.
Baidu was among the first domestic firms to launch a competitor service called Ernie Bot in March, with a promise to embed the AI chatbot into its existing services, including search.
At the March launch event, the Chinese search engine giant said that more than 650 companies have signed up to embed Ernie Bot into their services.
Alibaba's cloud business, meanwhile, has also started baking its ChatGPT-like artificial intelligence (AI) into a range of service offerings, including meeting assistant Tingwu and Slack-like office collaboration platform DingTalk.
Other than the industrial LLM service launched on Monday, Tencent is also working on a foundational AI model dubbed Hunyuan, which is yet to be released. Tencent founder and CEO Pony Ma Huateng, said earlier that his company was in no rush to launch unfinished products.
"[AI] is a once-in-a-century opportunity like the invention of electricity during the industrial revolution," Ma said at the company's latest earnings call in May.
"In the grand scheme of things, introducing the light bulb a month earlier wasn't that important. The key [for us now] is to build a solid foundation of algorithms, computing power, data and more importantly, use cases."
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What Makes Tencent Holding Ltd. (TCEHY) a New Strong Buy Stock
By: Zacks Equity Research | June 8, 2023
Tencent Holding Ltd. (TCEHY) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.
Since a changing earnings picture is a powerful factor influencing near-term stock price movements, the Zacks rating system is very useful for individual investors. They may find it difficult to make decisions based on rating upgrades by Wall Street analysts, as these are mostly driven by subjective factors that are hard to see and measure in real time.
Therefore, the Zacks rating upgrade for Tencent Holding Ltd. basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock Prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
For Tencent Holding Ltd. rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate Revisions
Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>>.
Earnings Estimate Revisions for Tencent Holding Ltd.
For the fiscal year ending December 2023, this company is expected to earn $2.13 per share, which is a change of 21% from the year-ago reported number.
Analysts have been steadily raising their estimates for Tencent Holding Ltd. Over the past three months, the Zacks Consensus Estimate for the company has increased 9%.
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of 'buy' and 'sell' ratings for its entire universe of more than 4000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a 'Strong Buy' rating and the next 15% get a 'Buy' rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
The upgrade of Tencent Holding Ltd. to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
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Tencent’s Sales Rebound Though Concerns Persist on China Outlook
By: Zheping Huang | May 18, 2023
Tencent Holdings Ltd. posted its fastest pace of revenue growth in more than a year but earnings missed estimates, reflecting an uneven internet sector recovery during China’s post-pandemic reopening.
China’s most valuable company grew online advertising by 17% as a gradual resumption of marketing fuels the business for sector leaders including Baidu Inc. Yet analysts had projected a sharper bounceback as the world’s No. 2 economy let down years of Covid Zero barriers. Tencent’s shares slid as much as 3.9% in Hong Kong.
Investors remain cautious after a year during which Tencent and its peers barely grew after regulatory crackdowns and Covid restrictions choked off the consumer and corporate spending. Mainstay internet businesses like advertising and gaming are only now emerging from their historic trough, while big tech firms have been forced to push aggressive cost cuts to endure an uncertain macroeconomic environment.
To revitalize the business, Tencent aims to integrate artificial intelligence capabilities across its suite of products from WeChat to online media, calling the technology a “growth multiplier.” ChatGPT, now a global phenomenon, triggered a race among Chinese tech firms to catch up. But the Shenzhen-based firm appears to lag behind rivals like Alibaba Group Holding Ltd. and Baidu, both of which have announced ChatGPT-style platforms and triggered a frenzy among investors.
President Martin Lau joined a number of technology executives — including OpenAI’s Sam Altman — in publicly welcoming regulation of the burgeoning space, in China or elsewhere. The company has been careful to stress its compliance with Beijing’s guidelines since gaming crackdowns of past years threatened to sap its business.
“We’re making good progress, and if you look into the different components, the model building is progressing well,” Lau told analysts on a conference call. It’s using “high-quality public data, as well as high-quality public data within our ecosystem.”
Revenue rose 11% to almost 150 billion yuan ($21.4 billion) for the three months ended March, exceeding the 146.29 billion yuan average forecast. But the net income of 25.8 billion yuan fell short of projections.
Tencent and peers like Alibaba, JD.com Inc., and Baidu are watched for clues to the health of Chinese business sentiment and consumption. JD.com’s revenue barely rose during the March quarter, but the more advertising-dependent search leader Baidu returned to double-digit growth. WeChat operator Tencent itself had only just resumed expanding revenue in the December quarter after months of decline.
Investors have flip-flopped on Chinese tech stocks this year, first buying into the belief that Beijing would rally the giant sector to boost the world’s No. 2 economy in 2023. But cheerleading by officials didn’t translate into concrete policy and signs have since grown that the country’s nascent economic recovery may already be petering out.
Tencent faces more specific challenges as well. It has yet to find its next big gaming success in China after Honor of Kings and Peacekeeper Elite cemented its lead in the pre-Covid era. The company aims to fill its long-empty pipeline in 2023 with hits like Valorant after Beijing’s censors resumed licensing approvals last year. Such new launches will test a rapidly saturating domestic market, where younger players are increasingly drawn to up-and-comers like anime specialist Mihoyo.
“Investors care more about geopolitics and China macro than stock specifics now,” said Vey-Sern Ling, managing director at Union Bancaire Privée...
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Tencent CEO: "During the first quarter of 2023, we achieved solid revenue growth
By: The Transcript | May 17, 2023
• Tencent CEO: "During the first quarter of 2023, we achieved solid revenue growth as our payment volumes benefitted from, and facilitated, domestic consumption recovery, our games revenue improved, and our advertising revenue sustained rapid growth"
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AI
