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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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Is Tencent (TCEHY) Stock a Buy?
By: Motley Fool | April 20, 2023
This giant is still not done yet in its quest to build its empire.
The last two years have been awful for Tencent Holdings Limited (TCEHY -2.37%). Once a darling, the tech conglomerate's stock price almost halved from its peak of around $90 per share.
With its stock price much cheaper today, should investors take a bite of this leading Chinese tech company? Let's explore this further in the article.
Tencent's recent performance has been disappointing.
Tencent has arguably had one of the best long-term track records for growth. Since its initial public offering (IPO) in 2004, revenue and net profit have grown by an annualized rate of 44%.
Its flawless performance, however, fell short lately as it delivered its first-ever annual decline in revenue. Net profit for the year performed worse, down by 17% year over year. The weaker performance was across the board, except for the fintech and business services segment, which reported a slight revenue increase. The regulatory crackdown on online learning and internet industries in China, and the ongoing negative impact of COVID-19 were some of the main drivers behind its weak performance.
It did not help that one of the central themes from Tencent throughout 2022 was about improving efficiency and controlling costs. In a way, it signaled to investors that the company would unlikely resume the kind of growth it had experienced in the first 16 years since its IPO.
Don't get me wrong. There is nothing wrong with a company improving its cost structure and efficiency. On the contrary, such a move was necessary during a challenging environment. But for Tencent's diehard fans, it might be disheartening to think that the company's hyper-growth days might be over.
Tencent's long-term growth prospects remain attractive
Let's face it. No company can continue to grow at 44% forever. And at its size -- $80 billion annual revenue -- Tencent is already a giant, so it's natural that its growth slows down over time.
Still, there are good reasons to believe that the company can continue to grow -- albeit slower -- by leveraging its twin engine of the franchise business and external investments.
The former relies on its social media networking services (mainly WeChat and QQ) and 1.3 billion monthly active users (MAU). As the dominant messaging service in China, Tencent can leverage its user base to offer an ever-expanding catalog of services to improve monetization. It already provides services like payments, gaming, online video, e-commerce, and music and is well-positioned to add new products over time.
On top of that, Tencent can rely on its capital allocation skills to divert unused cash into external investments. JD.com, Pinduoduo, Meituan, and Sea Limited are examples of Tencent's successful past investments. The beauty of this strategy is that Tencent has the flexibility to invest anywhere globally that it sees fit and in any company -- both listed and private -- across multiple industries. Think of it as Berkshire Hathaway but for technology companies.
With its twin engine for growth, Tencent has plenty of opportunities to allocate capital to grow shareholder value in the coming years.
So is Tencent stock a buy?
Tencent faces short-term headwinds from the Chinese government crackdown and the generally weak external economy. However, the tech behemoth should resume its upward trajectory in the longer term by growing its internal businesses and investment portfolio.
On balance, I'm cautiously optimistic about the company's prospects over the next few years. And with the stock trading at a reasonable price-to-earnings (PE) ratio of 16, I don't think it's too irrational for long-term investors to buy stock in the company.
Still, investors should expect a volatile ride ahead.
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Tencent $TCEHY - Metaverse update over a year later:
By: Markets & Mayhem | March 30, 2023
• Metaverse update over a year later:
- Tencent $TCEHY is disbanding its "extended reality" department
- The "Sandbox" say only $78K of sales in Feb compared to $63M in Nov of 2021
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Tencent says focus on cost-cutting, core business after first revenue fall
By: Josh Ye | March 22, 2023
HONG KONG (Reuters) -Tencent Holdings on Thursday said it would restrict its focus to its core business, while maintinaing cost-cutting and improving efficiencies, as it reported its first drop in annual revenue to date.
The world's largest video game company and operator of the WeChat messaging platform posted revenue of 554.55 billion yuan ($81 billion) for 2022, down 1% from a year earlier, after China's economic slowdown due to the pandemic and a long-running regulatory crackdown dented profits.
Analysts on average had expected 555.15 billion yuan, according to Refinitiv.
Profit attributable to equity holders fell 16% to 188.24 billion yuan for the year versus a consensus estimate of 114.19 billion yuan.
Tencent Chair and CEO Pony Ma told reporters on a call the company would focus this year on getting more out of existing core businesses, rather than on "trying to do everything" and on operating in "red ocean markets", where competition is intense.
"We hope that our entire business management team and technology will be more focused," he said. "I think this is very important because we can see that focus and making breakthroughs are very key to overall development."
The business outlook is uncertain in the world's largest gaming market after two years of regulatory crackdowns, but sector participants are hopeful of a recovery as regulators have resumed granting publishing licences since late last year after a months-long freeze.
Unlike in most other countries, video games need approval from regulators before release in China.
The crackdown has changed the operating environment for China's tech giants as regulators have tightened scrutiny over monopolistic behaviour and companies' handling of user information.
Martin Lau, president of the company, told a later call with analysts that regulations are being normalised and support for platform companies should improve this year.
"[Chinese president Xi Jinping recently] mentioned supporting platform companies to show competence, creating employment, driving consumption and international competition," he said, "The premier also highlighted the private sector would have a significant potential in the China economy."
ADVERTISING BUSINESS PICKS UP
Helping to offset the losses in domestic gaming and fintech, Tencent's online advertising business showed a surprisingly strong recovery in the fourth quarter, with revenue for the segment rising 15%, and contributing to a 1% rise in the group's revenue overall for the quarter ended December.
China's city lockdowns intensified in the weeks to early December when the country abruptly ended its zero-COVID policy, unleashing a wave of infections, which heavily disrupted the economy and caused many deaths.
Charlie Chai, an analyst with 86Research, said Tencent's performance as a whole was "lukewarm", but the advertising segment "shrugged off the COVID challenge and delivered industry-beating growth".
During the media call, Lau also spoke about the company's forays into generative artificial intelligence, which has seen a surge in global interest, driven by the popularity of Microsoft-backed startup OpenAI's chatbot ChatGPT.
Reuters reported last month that Tencent was working on a ChatGPT-like chatbot named the "HunyuanAide" that will incorporate Tencent's Hunyuan AI model.
Lau said the company was rapidly advancing its proprietary foundation model Hunyuan and planned to gradually roll out its own AI foundation models.
Tencent's chief strategy officer James Mitchell said that Tencent was ready to bear the large cost associated with training AI models even though it is focused on cost-cutting in other areas.
The United States in October announced export controls on high-end computer chips to China to try to contain AI development in the country, but Mitchell said Tencent has enough chips ready to develop its AI models.
($1 = 6.8887 Chinese yuan)
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Tencent Holdings Looks To Maintain Its Upside Momentum
By: Barchart | March 21, 2023
Since tumbling to a 6-year low in October, shares of China’s Tencent Holdings (TCTZF) have more than doubled to a 1-year high. Tencent Holdings has rallied on anticipation of future sales streams and optimism that the Chinese government will keep its promise of supporting the private sector. As a result, Tencent Holdings is up more than +8% this quarter, even as peers Alibaba Group Holding (BABA) and JD.com (JD) remain in the red.
According to analysts’ estimates, Wednesday’s quarterly earnings report for Tencent Holdings is expected to show Q4 revenue growth rose +0.2% after two quarters of contraction. Revenue growth is then expected to accelerate 6.7% in Q1 as the Chinese economy reopened from Covid lockdowns. Since the start of this year, analysts have raised their price target for Tencent Holding by +17%, citing a resumption of new game approvals, recovery in consumption, and the growing popularity of its WeChat video feed.
The increasing popularity of Tencent Holdings TikTok styled WeChat video feed is expected to boost ad sales and revenue for the company. Last year, the number of views of the WeChat video feed tripled, and executives forecast 1 billion yuan ($135 million) of ad sales through the feature in Q4. Analysts also expect that the post-Covid recovery in China will boost consumer and corporation spending on entertainment and advertising.
An easing of China’s regulatory crackdown on online video games is also helping to push shares of Tencent Holdings higher. The company’s new blockbuster video games Valorant and Pokemon Unite are in the pipeline after Tencent received approval from China’s regulators for new video games in December. On Monday, China’s online gaming regulator approved 27 more games, a positive factor for the online gaming industry. The optimism over the new games has boosted earnings estimates for Tencent Holdings. According to Bloomberg data, forward earnings estimates have risen by more than +5% this year, while analysts’ targets suggest a +29% increase in the company’s stock price over the next 12 months.
Some analysts are concerned that China may once again tighten scrutiny of major internet companies should the economy return to its pre-Covid pace of growth. Also, Chinese regulators last month said they are studying measures to curb addiction among Chinese youths of watching short videos. However, CMB International Capital said, “there are still a lot of bright spots that may bring upside surprises” for Tencent Holdings. “Also, the company could resume share buybacks after earnings.”
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Metaverse layoffs continue to mount as Tencent dismisses 300 employees
By: Jordan Finneseth | February 17, 2023
The metaverse continues to challenge even its most committed companies as Tencent, the tech firm behind the WeChat social media platform and China’s largest company by market cap, is reevaluating the approach to its metaverse offering and scrapping plans to launch virtual reality hardware.
According to a report from Reuters, the Chinese tech giant’s metaverse unit is now in cost-cutting mode amid worsening economic conditions and the broader struggles of the cryptocurrency ecosystem.
Tencent launched its “extended reality” XR unit in June as part of an ambitious plans to build virtual reality software and hardware, hiring 300 people to make it a reality.
The firm developed a concept for a ring-shaped handheld game controller, but issues with profitability – with internal forecasts predicting the XR project wouldn’t make money until 2027 – and the large investment required to produce a competitive product hampered its progress and prompted Tencent to alter its strategy.
A lack of promising games and non-gaming applications was also cited by one source as a reason for the shift in focus. "Under the company's new strategy as a whole, it no longer quite fit in," the source said.
All sources quoted in the Reuters story declined to be named as the information is confidential.
Tencent also had to walk away from plans to acquire gaming phone maker Black Shark, which was intended to beef up its hardware push and add 1,000 people to the unit, due to the shift in strategy and increasing regulatory scrutiny that would have required a lengthy review process.
On Thursday, Tencent confirmed that it would be making some personnel adjustments and notified the 300 staff members of the XR unit that they have been given two months to find new internal or external opportunities. The company pushed back against rumors that it was disbanding the XR unit entirely, saying that it was making adjustments to some business teams as its development plans for hardware had changed.
With this development, Tencent joins Microsoft and Facebook among the ranks of large firms that have recently shifted their metaverse strategy in the wake of economic struggles. Last Friday, Microsoft announced that it would be shutting down a team that was formed only four months ago to help customers use the metaverse in an industrial setting.
Facebook’s parent company Meta has also had to reduce its labor force as part of a cost-cutting initiative, announcing back in November that it would be laying off 13% of its workforce, or more than 11,000 employees. All sectors of the company will be affected by the layoffs, including Reality Labs, the unit responsible for developing augmented reality (AR), virtual reality (VR), and prototypes in emerging technologies such as mixed reality and brain-computer interfaces.
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Tencent scraps plans for VR hardware as metaverse bet falters - sources
By: Investing.com | February 17, 2023
HONG KONG (Reuters) -Tencent Holdings is abandoning plans to venture into virtual reality hardware, as a sobering economic outlook prompts the Chinese tech giant to cut costs and headcount at its metaverse unit, three sources familiar with the matter said. The world's largest video game publisher had ambitious plans to build both virtual reality software and hardware at an "extended reality" XR unit it launched in June last year, for which it hired nearly 300 people. It had come up with a concept for a ring-like hand-held game controller, but difficulties in achieving quick profitability and the large investment needed to produce a competitive product were among factors that prompted a shift away from that strategy, two of the sources said. One of the sources said the XR project was not expected to become profitable until 2027, according to an internal forecast. The second source said the unit also had a lack of promising games and non-gaming applications.
The sources declined to be named as the information is confidential. "Under the company's new strategy as a whole, it no longer quite fit in," the first source said. Earlier in the year, Tencent had also planned to buy gaming phone maker Black Shark, which it believed had supply chain and inventory experience that could beef up its hardware push and add 1,000 people to the unit.
However, it eventually walked away from that deal due to Tencent's shift in strategy, as well as mounting regulatory scrutiny and an expected lengthy review process, one of the sources who had direct knowledge of the matter said.
The sources said that Tencent had advised most of the unit's staff to seek other opportunities, confirming a Thursday report from Chinese tech news outlet 36Kr.
Tencent declined to comment on the Black Shark deal and whether Beijing's scrutiny had soured the deal. Regarding the status of the XR unit, the company referred to a statement to Reuters on Thursday that said it was making adjustments to some business teams as development plans for hardware had changed.
The company also said on Thursday that it was not disbanding the XR unit.
Tencent shares slipped as much as 2.5% after Reuters' report.
METAVERSE INTEREST
The launch of the XR unit came amid swelling global interest in the metaverse concept of virtual worlds and had marked a rare foray into hardware for Tencent, which is mostly known for software that includes a suite of games and social media applications.
It also entered into a race against Western peers such as Meta Platforms and Microsoft (NASDAQ:MSFT), which are building their own metaverses and have their own virtual reality hardware projects.
One of the sources said that Tencent had dabbled in virtual reality about seven years ago for a short while, and its interest in the area had been revived in 2021 after learning of new breakthroughs in pancake lenses and more powerful displays. Strong sales of Meta's Quest headset was also a driver, the person added.
But last year marked one of the toughest years for Tencent since its founding in 1998, with revenue battered by a regulatory crackdown and headwinds from measures to stop the spread of COVID-19.
Underlining such strains, its founder Pony Ma in December displayed a rare show of frustration at a year-end meeting when he lambasted senior managers for not working hard enough and said the company needed to focus on short video for future growth.
Several tech companies include Meta and Google (NASDAQ:GOOGL) have announced layoffs as they seek to trim costs amid rising fears of a global recession.
Pico, a virtual reality (VR) headset manufacturer owned by TikTok's Chinese developer ByteDance, said on Friday it was laying off a small number of people, after local media reported the start of hundreds of redundancies earlier this week. A source familiar with the matter said 200 staff were affected.
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Tencent Holdings Limited (TCEHY) Chart
By: DiscoverGold | February 11, 2023
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The price target for Tencent (TCEHY) has been raised to $330.00
By: Best Stocks | January 6, 2023
According to a research, note emailed to investors on Thursday, stock analysts at Mizuho raised Tencent’s (OTCMKTS: TCEHY) price target from $300 to $330.00. The note was included in a research package that was distributed to investors.
TCEHY has been the focus of research in various supplementary papers that have been published. KGI Securities downgraded their recommendation for Tencent from “outperform” to “neutral” in a research note published on October 24. On Friday, October 28, Barclays presented a research report in which they said they had decreased their target price for Tencent from $44.00 to $31.00. This information was included in the report. The share has been assigned four unique ratings, including two hold ratings, two buy recommendations, and one sell rating, all provided by equity research experts. Bloomberg.com’s rating for the stock is “Hold” at the moment, and the website anticipates its price will reach $180.50 shortly.
When trading started on Thursday, the share price of TCEHY was established at $45.99 per share. During its 52-week trading range, the price of Tencent’s stock ranged from a low of $24.75 to a high of $63. The company’s market capitalization is $440.34 billion, the price-to-earnings ratio of the stock is 16.54, and the company has a beta of 0.29. The moving average for the company over the past 50 days is currently sitting at $36.98, and the moving average over the past 200 days is currently sitting at $38.23.
On November 16, Tencent (OTCMKTS: TCEHY) released its most recent quarterly financial report results. The quarterly earnings per share (EPS) for the information technology company came in at $0.37, which was identical to the estimate made by the market as a whole, which was $0.37. The sales for the company for the quarter came in at $19.73 billion, which is significantly lower than the forecast that was made by analysts, which was $20.32 billion. Tencent had a return on equity of 8.93%, and the net margin for the company was 32.16%. According to analysts who follow stocks and shares, Tencent is expected to generate earnings of $1.29 per share during the current fiscal year.
As an investment holding company, Tencent Holdings Limited conducts business in Mainland China and several other countries, where it provides value-added services (VAS) and online advertising. The company can be broken down into the following categories, in descending order: other, fintech and business services, online advertising, and value-added services. In addition to its offerings in the areas of FinTech, cloud computing, and online advertising, it also provides services for online social networks, online games, and online advertising.
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$TCEHY Profits at industrial firms in China fell in the first 11 months of the year, as production slowed and factory-gate prices declined in the wake of Covid disruptions, reported Bloomberg. https://www.benzinga.com/markets/asia/22/12/30210214/tesla-production-reports-lead-to-carnage-for-chinese-ev-stocks-as-hang-seng-tech-majors-hold-it-toge
