Tencent Holdings Ltd (0700)

[dzwm87]

On paper, we are looking at cash on a consolidated basis. In reality, the cash are spread across different entities and there could be friction to transfer them to the listed holding co. In this sense, given the buybacks are on ADR level, there is another layer to move capital from onshore to offshore. For retailers like JD.com, there is need for working capital. For consolidated conglos like Alibaba, there are cash in other listed entities like Sun Art Retail which is going to first require another dividend up to Alibaba's level.

[Choon]

Surely a good sign of undervalued country specific market! Haha.

It is getting easier to shoot in the barrel!

I find below from Duan Yongping take on gaming draft rules to be interesting (translated using WeTranslate):
The nature of games is that people need somewhere to spend their time, and online games are the cheapest place to have fun and spend time. Nothing can stop people from playing games, otherwise what you let everyone do? But the quality of the games are many, playing mahjong is one of them. Net net, standardization to prevent certain people eager for quick success and instant benefit & profiteering is pretty good actually. In the long run, this kind of regulation is definitely good for good quality gaming companies.

Direct link in Chinese:
https://xueqiu.com/1247347556/272166720

Ksir, 

大道无形我有型 is the account of Duan Yongping?

Yup, that is right.
His comments are usually direct, blunt & almost always looking further than others.

The regulations (if ever being implemented as is), will likely kill off the existing small & medium gaming companies (the agency heads going to roll before that ever happen).
Releasing such rules during such depressed time and on friday (why not hold a few more hours and waited for the market to close, for market to digest over the weekend??), it is either "someone" trying to profit from the market panic or just the pure show of stupidity. I bet could be a combination of both.

But anyway, the saga did throw me opportunities to pick up more tencent below 300 and netease at 110. For that, kudos man!

Imho, the rules need to kill off half of the gaming companies before it brings down NetEase and almost all gaming companies before Tencent!

Thank you. I find his comments frank and sharp too. Will keep an eye on his postings.

In your investment thesis for Tencent, 

- how much of it is based on a 'value-play'  / that the price now is not commensurate to its current strength and quality; and

- how much of it is based on a 'growth-story' / that earnings could be substantially higher 5, 10, 15 years from now?

I ask because I struggle to see what future growth there can be given its dominance.

To start with, I am not a visionary and I don't have insider insights of Tencent, NetEase or other China Tech companies.
I am just a regular & happy user of their products/games.
Other than games, I constantly use weChat (mini programs, channels etc), weRead & Huya.

My main reasoning for investing in Tencent is so simple that it borders at dumb
I believe Weixin is a fertile land, it's a virtuous ecosystem for its habitants and products/services offered to satisfy their needs.

As long as it remains so, the growth should come from deepening & widening the products/services and NOT from expanding its habitants (being almost all china users already onboard and restriction of international users).

Gaming is just a huge product segment NOW and probably in near future, but as much as I love playing games (now indulging myself in pokemon unite), it's not my main reason to own Tencent.

Ksir,

I don't think your main reason is dumb. In fact, I quite like the decisiveness of your conclusion that Weixin is a fertile land. Thanks for sharing.

I have been reading and trying to imagine what new significant products/services there can be to engender growth. Not easy as I do not use much of Tencent functions, only its messaging function.

From what I can make sense of (but I am more conservative than imaginative), I think there can be incremental (low single-digit) growth contributed by:
1)   Mini programs giving Tencent a small increment in advertising revenue;
2)   Mini programs giving Tencent a small increment in fees earned from commercial payments;
3) Video accounts giving Tencent a small increment in advertising revenue;
4) Video accounts giving Tencent a small increment in commission from ecommerce live streaming;
5) AI possibly adding new commercial vitality to entire existing range of products.

But because it all seems incremental (low single-digit) growth so I thought a PE of 15X is not cheap, but reasonable. Am I missing something?

Do you pay (paid subscription) for any of your Tencent services (weRead)?

As an aside, there has been no news on the new game, To Jin Yong, which I thought could be a big thing.

[Choon]

What I have observed across the various social media platforms pertaining to China stocks are 2 camps: those who have completely given up on China and those who are doubling down on the basis on buy when it is cheap.

The latter group is no doubt correct when basing on fundamentals. China Tech are at below 15 times P/E, 10 times or below in free cash flow, they are indeed bargains of the decade where if their fumdamentals are to match international peers, the market cap are set to triple.

However, Tencent, Alibaba, JD, Netease, TME, Ping An Insurance, Huya and the list goes on are facing a higher degree of political overhang. As long as this political overhang remains, there will also be a discount in its fundamentals. If these companies want to close this discount, they have to prove that their "Cash pile" and "cashflow generated" is distrbutable, unfortunately both Tencent and Alibaba are not doing well in this department. They distribute only a small fraction of their free cash while hoarding a larger and larger cash pile.

With both China politics and China Economy not doing them any favour, as OPMI, we have to depend on the mgmt's grace to help us realise value. However, it is apparent both Tencent and Alibaba do not seem to put shareholders very high in its priority. The current reality of their share prices are a reflection of this

"China Tech are at below 15 times P/E, 10 times or below in free cash flow, they are indeed bargains of the decade where if their fumdamentals are to match international peers, the market cap are set to triple."

Hi CY09, 

My valuation method for Tencent is as follows and attached [attachment=1859] . I am not sure. Can you share how you value Tencent

(1) Share price of HKD 300 gives mkt cap of ~RMB 2600B;
(2) Tencent discloses its fair value and carrying value of investees amounting to ~RMB 800B (see attached) [attachment=1860];
(3) Point (1) - Point (2) gives adjusted mkt cap of  ~RMB 1800B;
(4) Based on 9MFY23, I project FY23 PATMI of RMB 122B;
(5) Point (4) / Point (3) gives ~15x.

[CY09]

Tencent is difficult to value because it does not differentitate itself segment by segment and show which companies are counted under each Segment. This is unlike Alibaba's quarterly presentation which shows what each segment accounts for and what companies are in the segment. However, my view and how i give a fair value is a sum of parts and estimate its segment worth. For its online social media/ advert arm, it should be worth a HKD$1.15 trillion based on its segment earnings of 30 times P/E

Secondly, tencent as a conglomerate have a large group of holdings and the valuation of USD 113 billion might be understated because I feel Tencent music and Huya are undervalued by the market and I would add a few more billion, preference is to place it at USD120 billion (HKD $937 billion).

The above two contributes HKD$2 trillion to the congolemerate.

Its gaming and Fintech/Business is likely to generate about RMB$150 (HKD$165 billion). This means for HKD$700 billion, I am paying for a segment at about 4 times P/E. That is cheap. I view these segments to be about HKD$3 trillion. And therefore the upside of Tencent as a whole could be about 70-80% more, of course if we based the price earnings to International peers, 20-30 times P/E is on the low end. My view is that Tencent Holdings is a HKD$5 trillion conglomerate

For how I estimated 15 times P/E, 10 times free cash flow. Its based on financial results. It generates adjusted EBITDA of RMB$225 billion, minus off taxes of RMB$25 billion, free cash is about RMB$200 billion (HKD $220 billion). Current free cash is about 12 times. Tencent profit to its shareholders is RMB$194 billion (HKD $213.2 billion) based on its last 4 quarter results. Based on its current share prices, its P/E is about 13 times now

Alibaba I did a sum of parts and i got about USD$424 billion

[ksir]

Ksir, 

大道无形我有型 is the account of Duan Yongping?

Yup, that is right.
His comments are usually direct, blunt & almost always looking further than others.

The regulations (if ever being implemented as is), will likely kill off the existing small & medium gaming companies (the agency heads going to roll before that ever happen).
Releasing such rules during such depressed time and on friday (why not hold a few more hours and waited for the market to close, for market to digest over the weekend??), it is either "someone" trying to profit from the market panic or just the pure show of stupidity. I bet could be a combination of both.

But anyway, the saga did throw me opportunities to pick up more tencent below 300 and netease at 110. For that, kudos man!

Imho, the rules need to kill off half of the gaming companies before it brings down NetEase and almost all gaming companies before Tencent!

Thank you. I find his comments frank and sharp too. Will keep an eye on his postings.

In your investment thesis for Tencent, 

- how much of it is based on a 'value-play'  / that the price now is not commensurate to its current strength and quality; and

- how much of it is based on a 'growth-story' / that earnings could be substantially higher 5, 10, 15 years from now?

I ask because I struggle to see what future growth there can be given its dominance.

To start with, I am not a visionary and I don't have insider insights of Tencent, NetEase or other China Tech companies.
I am just a regular & happy user of their products/games.
Other than games, I constantly use weChat (mini programs, channels etc), weRead & Huya.

My main reasoning for investing in Tencent is so simple that it borders at dumb
I believe Weixin is a fertile land, it's a virtuous ecosystem for its habitants and products/services offered to satisfy their needs.

As long as it remains so, the growth should come from deepening & widening the products/services and NOT from expanding its habitants (being almost all china users already onboard and restriction of international users).

Gaming is just a huge product segment NOW and probably in near future, but as much as I love playing games (now indulging myself in pokemon unite), it's not my main reason to own Tencent.

Ksir,

I don't think your main reason is dumb. In fact, I quite like the decisiveness of your conclusion that Weixin is a fertile land. Thanks for sharing.

I have been reading and trying to imagine what new significant products/services there can be to engender growth. Not easy as I do not use much of Tencent functions, only its messaging function.

From what I can make sense of (but I am more conservative than imaginative), I think there can be incremental (low single-digit) growth contributed by:
1)   Mini programs giving Tencent a small increment in advertising revenue;
2)   Mini programs giving Tencent a small increment in fees earned from commercial payments;
3) Video accounts giving Tencent a small increment in advertising revenue;
4) Video accounts giving Tencent a small increment in commission from ecommerce live streaming;
5) AI possibly adding new commercial vitality to entire existing range of products.

But because it all seems incremental (low single-digit) growth so I thought a PE of 15X is not cheap, but reasonable. Am I missing something?

Do you pay (paid subscription) for any of your Tencent services (weRead)?

As an aside, there has been no news on the new game, To Jin Yong, which I thought could be a big thing.

Yes, I've been paid user of weRead for 2 years.
I'd say cheap and good! 
UX is the best digital reader I ever used.

Imo, some main Products & Services in Weixin ecosystems are not optimally monetized! 
Case in point, to me personally, official accounts are really godsend, far better than any blogs, substack etc. 
Mini Programs although mostly not available in SG, I believe it's also under-monetized. Currently the mini games are the super high margin growth area.

Channels is growing well also, although rather far behind Douyin! 
Their strength is in Weixin close-loop. It should grow well.

WePay & Financial products should return to growth, but they are cautious, as Pony said it well, it's about who survive longer, NOT about who grow faster (Ant has proved the message).

I will not hold my breath for To Jin Yong game, NetEase is stronger in this area, Justice Mobile has proved this and its new "where Wind meets" game looks darn interesting.
For Tencent game, I'd be more interested in their international games (eg: Black Wukong, Last Sentinel) and how their new party game (spent a tons to promote) can beat NetEase's eggy party and of course their growing professional competition games (eg: Valorant, PUBG etc).
Their growing eSport is another under-monetized one as well. 
I used to be Soccer fans, but after watching eSports (LOL, HOK etc), I find soccer darn boring. hahaha (maybe only me, but I think eSports are the sport of the future).

<invested, main holding and super biased! >

[Choon]

Yup, that is right.
His comments are usually direct, blunt & almost always looking further than others.

The regulations (if ever being implemented as is), will likely kill off the existing small & medium gaming companies (the agency heads going to roll before that ever happen).
Releasing such rules during such depressed time and on friday (why not hold a few more hours and waited for the market to close, for market to digest over the weekend??), it is either "someone" trying to profit from the market panic or just the pure show of stupidity. I bet could be a combination of both.

But anyway, the saga did throw me opportunities to pick up more tencent below 300 and netease at 110. For that, kudos man!

Imho, the rules need to kill off half of the gaming companies before it brings down NetEase and almost all gaming companies before Tencent!

Thank you. I find his comments frank and sharp too. Will keep an eye on his postings.

In your investment thesis for Tencent, 

- how much of it is based on a 'value-play'  / that the price now is not commensurate to its current strength and quality; and

- how much of it is based on a 'growth-story' / that earnings could be substantially higher 5, 10, 15 years from now?

I ask because I struggle to see what future growth there can be given its dominance.

To start with, I am not a visionary and I don't have insider insights of Tencent, NetEase or other China Tech companies.
I am just a regular & happy user of their products/games.
Other than games, I constantly use weChat (mini programs, channels etc), weRead & Huya.

My main reasoning for investing in Tencent is so simple that it borders at dumb
I believe Weixin is a fertile land, it's a virtuous ecosystem for its habitants and products/services offered to satisfy their needs.

As long as it remains so, the growth should come from deepening & widening the products/services and NOT from expanding its habitants (being almost all china users already onboard and restriction of international users).

Gaming is just a huge product segment NOW and probably in near future, but as much as I love playing games (now indulging myself in pokemon unite), it's not my main reason to own Tencent.

Ksir,

I don't think your main reason is dumb. In fact, I quite like the decisiveness of your conclusion that Weixin is a fertile land. Thanks for sharing.

I have been reading and trying to imagine what new significant products/services there can be to engender growth. Not easy as I do not use much of Tencent functions, only its messaging function.

From what I can make sense of (but I am more conservative than imaginative), I think there can be incremental (low single-digit) growth contributed by:
1)   Mini programs giving Tencent a small increment in advertising revenue;
2)   Mini programs giving Tencent a small increment in fees earned from commercial payments;
3) Video accounts giving Tencent a small increment in advertising revenue;
4) Video accounts giving Tencent a small increment in commission from ecommerce live streaming;
5) AI possibly adding new commercial vitality to entire existing range of products.

But because it all seems incremental (low single-digit) growth so I thought a PE of 15X is not cheap, but reasonable. Am I missing something?

Do you pay (paid subscription) for any of your Tencent services (weRead)?

As an aside, there has been no news on the new game, To Jin Yong, which I thought could be a big thing.

Yes, I've been paid user of weRead for 2 years.
I'd say cheap and good! 
UX is the best digital reader I ever used.

Imo, some main Products & Services in Weixin ecosystems are not optimally monetized! 
Case in point, to me personally, official accounts are really godsend, far better than any blogs, substack etc. 
Mini Programs although mostly not available in SG, I believe it's also under-monetized. Currently the mini games are the super high margin growth area.

Channels is growing well also, although rather far behind Douyin! 
Their strength is in Weixin close-loop. It should grow well.

WePay & Financial products should return to growth, but they are cautious, as Pony said it well, it's about who survive longer, NOT about who grow faster (Ant has proved the message).

I will not hold my breath for To Jin Yong game, NetEase is stronger in this area, Justice Mobile has proved this and its new "where Wind meets" game looks darn interesting.
For Tencent game, I'd be more interested in their international games (eg: Black Wukong, Last Sentinel) and how their new party game (spent a tons to promote) can beat NetEase's eggy party and of course their growing professional competition games (eg: Valorant, PUBG etc).
Their growing eSport is another under-monetized one as well. 
I used to be Soccer fans, but after watching eSports (LOL, HOK etc), I find soccer darn boring. hahaha (maybe only me, but I think eSports are the sport of the future).

<invested, main holding and super biased! >

Thank you for your sharing 

I went to follow some Official Accounts and explore Uniqlo Mini Program past few days. Uniqlo mini program loads quickly and is user-friendly to browse.

I think there could be much untapped value potential in mini programs? It seems that Tencent is not monetising transaction fulfilment on mini programs, choosing to earn only advertising and payment fees. I interpret this as Tencent operating a Shopify business but not charging the fees that Shopify charges (platform hosting/transaction commission).

Have you thought about or if you have to put a CAGR growth rate on Tencent underlying earnings for the next 10 years, what would that number be?

I think it can be about 7%
- 6% arising from product innovation on existing broad range of products/services;
- 1% arising from rising GDP/capita.

[CY09]

https://twitter.com/ShanghaiMacro/status...4629137613

A civil service sacking because what he sought to introduce stoked fear and too much market disdain

[ksir]

Thank you. I find his comments frank and sharp too. Will keep an eye on his postings.

In your investment thesis for Tencent, 

- how much of it is based on a 'value-play'  / that the price now is not commensurate to its current strength and quality; and

- how much of it is based on a 'growth-story' / that earnings could be substantially higher 5, 10, 15 years from now?

I ask because I struggle to see what future growth there can be given its dominance.

To start with, I am not a visionary and I don't have insider insights of Tencent, NetEase or other China Tech companies.
I am just a regular & happy user of their products/games.
Other than games, I constantly use weChat (mini programs, channels etc), weRead & Huya.

My main reasoning for investing in Tencent is so simple that it borders at dumb
I believe Weixin is a fertile land, it's a virtuous ecosystem for its habitants and products/services offered to satisfy their needs.

As long as it remains so, the growth should come from deepening & widening the products/services and NOT from expanding its habitants (being almost all china users already onboard and restriction of international users).

Gaming is just a huge product segment NOW and probably in near future, but as much as I love playing games (now indulging myself in pokemon unite), it's not my main reason to own Tencent.

Ksir,

I don't think your main reason is dumb. In fact, I quite like the decisiveness of your conclusion that Weixin is a fertile land. Thanks for sharing.

I have been reading and trying to imagine what new significant products/services there can be to engender growth. Not easy as I do not use much of Tencent functions, only its messaging function.

From what I can make sense of (but I am more conservative than imaginative), I think there can be incremental (low single-digit) growth contributed by:
1)   Mini programs giving Tencent a small increment in advertising revenue;
2)   Mini programs giving Tencent a small increment in fees earned from commercial payments;
3) Video accounts giving Tencent a small increment in advertising revenue;
4) Video accounts giving Tencent a small increment in commission from ecommerce live streaming;
5) AI possibly adding new commercial vitality to entire existing range of products.

But because it all seems incremental (low single-digit) growth so I thought a PE of 15X is not cheap, but reasonable. Am I missing something?

Do you pay (paid subscription) for any of your Tencent services (weRead)?

As an aside, there has been no news on the new game, To Jin Yong, which I thought could be a big thing.

Yes, I've been paid user of weRead for 2 years.
I'd say cheap and good! 
UX is the best digital reader I ever used.

Imo, some main Products & Services in Weixin ecosystems are not optimally monetized! 
Case in point, to me personally, official accounts are really godsend, far better than any blogs, substack etc. 
Mini Programs although mostly not available in SG, I believe it's also under-monetized. Currently the mini games are the super high margin growth area.

Channels is growing well also, although rather far behind Douyin! 
Their strength is in Weixin close-loop. It should grow well.

WePay & Financial products should return to growth, but they are cautious, as Pony said it well, it's about who survive longer, NOT about who grow faster (Ant has proved the message).

I will not hold my breath for To Jin Yong game, NetEase is stronger in this area, Justice Mobile has proved this and its new "where Wind meets" game looks darn interesting.
For Tencent game, I'd be more interested in their international games (eg: Black Wukong, Last Sentinel) and how their new party game (spent a tons to promote) can beat NetEase's eggy party and of course their growing professional competition games (eg: Valorant, PUBG etc).
Their growing eSport is another under-monetized one as well. 
I used to be Soccer fans, but after watching eSports (LOL, HOK etc), I find soccer darn boring. hahaha (maybe only me, but I think eSports are the sport of the future).

<invested, main holding and super biased! >

Thank you for your sharing 

I went to follow some Official Accounts and explore Uniqlo Mini Program past few days. Uniqlo mini program loads quickly and is user-friendly to browse.

I think there could be much untapped value potential in mini programs? It seems that Tencent is not monetising transaction fulfilment on mini programs, choosing to earn only advertising and payment fees. I interpret this as Tencent operating a Shopify business but not charging the fees that Shopify charges (platform hosting/transaction commission).

Have you thought about or if you have to put a CAGR growth rate on Tencent underlying earnings for the next 10 years, what would that number be?

I think it can be about 7%
- 6% arising from product innovation on existing broad range of products/services;
- 1% arising from rising GDP/capita.

I am pretty sure I can't see that far ahead of 10 years. But I am more optimistic than you on Tencent growth, if it can reach core PATMI RMB 200B in 3-5 years, I'd be rather happy with that. 

What you said on Mini Programs is what I think Tencent way of strectching the revenue longer. It's all about user experience vs monetisation (value vs price).

Case in point, as a super regular user of WeRead, I think it provides me tons more values than what I paid (RMB168 per year).
If there is a way to easily activate wePay, I wouldn't mind to pay double/triple that price. 

It's the same for their games, they said it clearly in the latest webcast that they think mini games provided high margin revenue and growing very well in 2023 and hence they put more into their new games and stretch the monetisation longer.

If they want, they could have grown 20-40% a year for next several years with monetising mini programs, games, double/triple ads in weixin etc.
But don't think that is Tencent way, theirs is to stretch the revenue longer and more sustainably.
If we look at data.ai for china market in last 30days top 10 grossings:
https://www.data.ai/en/apps/unified-app/...last-month
Tencent are in 1, 2, 4, 7 & 10. Top 2 are HOK & GFP, quite old games, how can games be that evergreen? It has to do with not overly monetising them.
NetEase is another with evergreen games. They know how to balance value vs price.

<Tencent & NetEase are in my top 3 holdings, so take any of my biased view on them with pinch of salt>

[Choon]

To start with, I am not a visionary and I don't have insider insights of Tencent, NetEase or other China Tech companies.
I am just a regular & happy user of their products/games.
Other than games, I constantly use weChat (mini programs, channels etc), weRead & Huya.

My main reasoning for investing in Tencent is so simple that it borders at dumb
I believe Weixin is a fertile land, it's a virtuous ecosystem for its habitants and products/services offered to satisfy their needs.

As long as it remains so, the growth should come from deepening & widening the products/services and NOT from expanding its habitants (being almost all china users already onboard and restriction of international users).

Gaming is just a huge product segment NOW and probably in near future, but as much as I love playing games (now indulging myself in pokemon unite), it's not my main reason to own Tencent.

Ksir,

I don't think your main reason is dumb. In fact, I quite like the decisiveness of your conclusion that Weixin is a fertile land. Thanks for sharing.

I have been reading and trying to imagine what new significant products/services there can be to engender growth. Not easy as I do not use much of Tencent functions, only its messaging function.

From what I can make sense of (but I am more conservative than imaginative), I think there can be incremental (low single-digit) growth contributed by:
1)   Mini programs giving Tencent a small increment in advertising revenue;
2)   Mini programs giving Tencent a small increment in fees earned from commercial payments;
3) Video accounts giving Tencent a small increment in advertising revenue;
4) Video accounts giving Tencent a small increment in commission from ecommerce live streaming;
5) AI possibly adding new commercial vitality to entire existing range of products.

But because it all seems incremental (low single-digit) growth so I thought a PE of 15X is not cheap, but reasonable. Am I missing something?

Do you pay (paid subscription) for any of your Tencent services (weRead)?

As an aside, there has been no news on the new game, To Jin Yong, which I thought could be a big thing.

Yes, I've been paid user of weRead for 2 years.
I'd say cheap and good! 
UX is the best digital reader I ever used.

Imo, some main Products & Services in Weixin ecosystems are not optimally monetized! 
Case in point, to me personally, official accounts are really godsend, far better than any blogs, substack etc. 
Mini Programs although mostly not available in SG, I believe it's also under-monetized. Currently the mini games are the super high margin growth area.

Channels is growing well also, although rather far behind Douyin! 
Their strength is in Weixin close-loop. It should grow well.

WePay & Financial products should return to growth, but they are cautious, as Pony said it well, it's about who survive longer, NOT about who grow faster (Ant has proved the message).

I will not hold my breath for To Jin Yong game, NetEase is stronger in this area, Justice Mobile has proved this and its new "where Wind meets" game looks darn interesting.
For Tencent game, I'd be more interested in their international games (eg: Black Wukong, Last Sentinel) and how their new party game (spent a tons to promote) can beat NetEase's eggy party and of course their growing professional competition games (eg: Valorant, PUBG etc).
Their growing eSport is another under-monetized one as well. 
I used to be Soccer fans, but after watching eSports (LOL, HOK etc), I find soccer darn boring. hahaha (maybe only me, but I think eSports are the sport of the future).

<invested, main holding and super biased! >

Thank you for your sharing 

I went to follow some Official Accounts and explore Uniqlo Mini Program past few days. Uniqlo mini program loads quickly and is user-friendly to browse.

I think there could be much untapped value potential in mini programs? It seems that Tencent is not monetising transaction fulfilment on mini programs, choosing to earn only advertising and payment fees. I interpret this as Tencent operating a Shopify business but not charging the fees that Shopify charges (platform hosting/transaction commission).

Have you thought about or if you have to put a CAGR growth rate on Tencent underlying earnings for the next 10 years, what would that number be?

I think it can be about 7%
- 6% arising from product innovation on existing broad range of products/services;
- 1% arising from rising GDP/capita.

I am pretty sure I can't see that far ahead of 10 years. But I am more optimistic than you on Tencent growth, if it can reach core PATMI RMB 200B in 3-5 years, I'd be rather happy with that. 

What you said on Mini Programs is what I think Tencent way of strectching the revenue longer. It's all about user experience vs monetisation (value vs price).

Case in point, as a super regular user of WeRead, I think it provides me tons more values than what I paid (RMB168 per year).
If there is a way to easily activate wePay, I wouldn't mind to pay double/triple that price. 

It's the same for their games, they said it clearly in the latest webcast that they think mini games provided high margin revenue and growing very well in 2023 and hence they put more into their new games and stretch the monetisation longer.

If they want, they could have grown 20-40% a year for next several years with monetising mini programs, games, double/triple ads in weixin etc.
But don't think that is Tencent way, theirs is to stretch the revenue longer and more sustainably.
If we look at data.ai for china market in last 30days top 10 grossings:
https://www.data.ai/en/apps/unified-app/...last-month
Tencent are in 1, 2, 4, 7 & 10. Top 2 are HOK & GFP, quite old games, how can games be that evergreen? It has to do with not overly monetising them.
NetEase is another with evergreen games. They know how to balance value vs price.

<Tencent & NetEase are in my top 3 holdings, so take any of my biased view on them with pinch of salt>

I am not a gamer or avid user of WeChat's ecosystem so I find your thoughts and user experience interesting. Thanks for sharing.

Tencent is monetising live streaming e-commerce on Video Accounts even though they have chose not to monetise e-commerce on Mini Programs. This confuses me. But they must have well-considered this dichotomy.

Do you have any thoughts on their Cloud business? I am skeptical of both Ali and Tencent's strategy of being a B2B cloud provider, why would this business fit with their core B2C business? I became less skeptical of Tencent after reading Pony's dressing down speech to the company, where he directed that Tencent cloud should avoid being an aggregator and focus (seems to be a very narrow focus) on Tencent's existing strengths/products: enterprise productivity apps and mini programs.

[ksir]

I am not a gamer or avid user of WeChat's ecosystem so I find your thoughts and user experience interesting. Thanks for sharing.

Tencent is monetising live streaming e-commerce on Video Accounts even though they have chose not to monetise e-commerce on Mini Programs. This confuses me. But they must have well-considered this dichotomy.

Do you have any thoughts on their Cloud business? I am skeptical of both Ali and Tencent's strategy of being a B2B cloud provider, why would this business fit with their core B2C business? I became less skeptical of Tencent after reading Pony's dressing down speech to the company, where he directed that Tencent cloud should avoid being an aggregator and focus (seems to be a very narrow focus) on Tencent's existing strengths/products: enterprise productivity apps and mini programs.

Video Accounts monetisation is easier as Douyin/TikTok has done that successfully.
VA is still quite far behind Douyin in scale, technical etc.
Imo, short video monetisation is also easier due to its addictive (or you can call it stickiness) effects.
As in, easier to earn $ from alchohol, cigar than most other products.

Imho, even games have more positive values than short videos, but alas, short video is darn addictive (brainless + addictive, who can resist).

Short video also easier to embed ads and somehow it's auto-played right? so the click through is high.

Not sure if I interpreted you correctly, but cloud is naturally B2B.
Earning $ in Cloud biz can only be B2B, as in how many people will pay for cloud services?
That said, I'm quite happy with the downscaling of cloud biz players in China.
Tencent is now focusing more on their strength, eg: in video streaming, messaging etc, from what I know quite a lot of video streaming products are using Tencent PaaS or SaaS.

Previously the players are in war of grabbing the general Infrastucture (IaaS) market (big but commodity)
but now, they are focusing more on Platform (PaaS) & Services (SaaS).

IaaS is imo, low margin and hence need huge scale, AWS is the leader here, how you fight with the Walmart of the cloud?
So far, the best way is to learn from Microsoft example.
Microsoft leverages on their Office365 suite (SaaS) and soon CoPilot will be another magic bullet, to grab the market share from AWS. I mean why you still use AWS if most of products you use are in Microsoft cloud, bcos it'd be more seamless.

So the current development of cloud players trying to differentiate their offerings is great and it should create different giants with their own strength, for instance could be:
Video streaming, messaging, games go to Tencent.
AI, auto-driving go to Baidu.
eCommerce go to Baba.
Supply chain go to JD.
etc etc.