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Tencent Holdings Ltd (0700)
08-09-2018, 01:08 PM.
Post: #101
RE: Tencent Holdings Ltd (0700)
Minors ain't their main income stream (I hope). This is a great move by Tencent, still a dire situation for Tencent in general (the decision that the Chinese government is going to clamp down on online gaming addiction), at least in the short term.

That said, gaming will continue to have an increasing importance in the world in general. But competition of internet companies to get people addicted to their platform is not sustainable. 

Online entertainment companies like Tencent, needs to shift away from a model that optimize user to spend more time on their platform, to a business model that maximize quality of users' time spent on their platform.

Investors looking to invest in Tencent today, need to have confidence that Tencent is able to make that shift, in the medium to long term. Especially in China.

(vested; but Tencent is starting to look pricey due to the limited growth potential in the short term)
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger

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10-10-2018, 05:57 PM.
Post: #102
RE: Tencent Holdings Ltd (0700)
https://www.bloomberg.com/news/articles/...-companies

Still trades at 25x 12mth forward earnings after tanking a whopping 40%, a sign of the times I guess.

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11-10-2018, 09:03 PM.
Post: #103
RE: Tencent Holdings Ltd (0700)
Well. It's earnings took an unexpected hit. It is still growing top line at 30% per year, which will more than double it's earnings in less than 3 years, and some analyst are projecting it may grow earnings at the same rate for much longer.

That said, it previously was growing at a clip of 50-70% irrc, until the Chinese government basically ban issuing any new gaming license indefinitely. 

It's a long way to fall if earnings growth did not meet high initial projections.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger

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12-10-2018, 10:34 AM. (This post was last modified: 12-10-2018, 10:35 AM by weijian.)
Post: #104
RE: Tencent Holdings Ltd (0700)
(22-03-2018, 06:36 PM)specuvestor Wrote: South African media company Naspers Ltd. is cashing in a tiny sliver of one of the greatest venture-capital investments ever.
The company is selling $10.6 billion of shares in Tencent Holdings Ltd., equal to 2 percent of the stock in the Chinese operator of the WeChat messaging service, the Cape Town-based company said in a statementThursday.
The sale comes hours after Tencent, Asia’s most valuable company, warnedit will sacrifice short-term margins, spending on content and technology in pursuit of growth. While the forecast led to a 5 percent slump in Tencent’s stock, Naspers said it still considers the company “to be one of the very best growth enterprises in any industry in the world, managed by an exceptionally able team.”
Naspers might have remained an obscure publisher of South African newspapers and operator of pay-TV services if not for its decision in 2001 to invest $32 million in Tencent, a then little-known Chinese startup. The stake is now worth $175 billion and given that Naspers has a market value of about $125.5 billion, it means investors place no value on Naspers’ other operation

https://www.bloomberg.com/news/articles/...nvestments

On hindsight, Naspers were great market timers this time around (of course, future hindsights may prove it wrong)

I am attaching the presentation made by John Huber that was shared ~1 year ago. I still think all of its points are relevant - especially the fact that the potential and run way for growth/monetization of WECHAT. Of course, in China, the greatest risk is the Communist Party and competition is just intense but that is already well known for a long time. 

https://www.valuebuddies.com/thread-4788...#pid142137

Looking at the TENCENT's current revenue/profit, the majority is coming from gaming but where is the crown jewel? Somehow, it felt like previously TENCENT wasn't valued as a gaming company but now it is. So if it isn't really a gaming company, then valuations now looks interesting to take a closer look.

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12-10-2018, 01:10 PM.
Post: #105
RE: Tencent Holdings Ltd (0700)
Indeed. I'm a believer of Tencent long term. If they continue to grow top line 30% like last quarter for the next 3 years (a feat that was a far cry from what they achieved for the last 10 years growing at least 40%), and is valued similarly today (which is not high by any measure), they could easily double from current price and then some.

(not vested)
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger

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12-10-2018, 03:21 PM.
Post: #106
RE: Tencent Holdings Ltd (0700)
(12-10-2018, 10:34 AM)weijian Wrote:
(22-03-2018, 06:36 PM)specuvestor Wrote: South African media company Naspers Ltd. is cashing in a tiny sliver of one of the greatest venture-capital investments ever.
The company is selling $10.6 billion of shares in Tencent Holdings Ltd., equal to 2 percent of the stock in the Chinese operator of the WeChat messaging service, the Cape Town-based company said in a statementThursday.
The sale comes hours after Tencent, Asia’s most valuable company, warnedit will sacrifice short-term margins, spending on content and technology in pursuit of growth. While the forecast led to a 5 percent slump in Tencent’s stock, Naspers said it still considers the company “to be one of the very best growth enterprises in any industry in the world, managed by an exceptionally able team.”
Naspers might have remained an obscure publisher of South African newspapers and operator of pay-TV services if not for its decision in 2001 to invest $32 million in Tencent, a then little-known Chinese startup. The stake is now worth $175 billion and given that Naspers has a market value of about $125.5 billion, it means investors place no value on Naspers’ other operation

https://www.bloomberg.com/news/articles/...nvestments

On hindsight, Naspers were great market timers this time around (of course, future hindsights may prove it wrong)

I am attaching the presentation made by John Huber that was shared ~1 year ago. I still think all of its points are relevant - especially the fact that the potential and run way for growth/monetization of WECHAT. Of course, in China, the greatest risk is the Communist Party and competition is just intense but that is already well known for a long time. 

https://www.valuebuddies.com/thread-4788...#pid142137

Looking at the TENCENT's current revenue/profit, the majority is coming from gaming but where is the crown jewel? Somehow, it felt like previously TENCENT wasn't valued as a gaming company but now it is. So if it isn't really a gaming company, then valuations now looks interesting to take a closer look.

Tencent has always been valued as a gaming company, in fact the massive run up in the stock in late 2017/early 2018 was likely due to the success of fortnite and pubg. It isn't so different from the way TTWO is valued, the company has 2 successful franchises (albeit extremely successful ones) and the valuation is based on the hype generated by those games, the market is generally willing to pay higher and higher multiples on these companies as long as those games continue to generate tons of hype, few care about the risk that these games might no longer be popular 2 years down the road, and they certainly do not care if the hype is able to generate sufficient profits to justify the crazy multiples on these companies.

These are all indications of a stock market thats in a serious bubble, dumb money has been slapping all sorts of stupid valuations on stocks based on pure hype, I doubt even 20% of the investors who are putting their money into these stocks read a 10-k, know corporate finance, etc. A decade of cheap money has distorted the way companies are valued, to illustrate, 83% of US companies thats gone public in 2018 lost money in the last 12 mths leading up to the IPO, thats more than the 81% recorded in 2000 and we all know what happened soon after.

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