Tencent Holdings Ltd (0700)

[Wildreamz]

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)

[lilvestor]

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.

[Wildreamz]

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.

[weijian]

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.

[Wildreamz]

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)

[lilvestor]

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.

[cyclone]

Tencent’s biggest shareholder says Chinese tech has been a ‘bloodbath’ — but the future looks bright
* Naspers, a South African consumer internet company, owns a 31% stake valued at roughly $126 billion in Chinese tech giant Tencent.
* In an interview at the Money20/20 Europe conference on Monday, Naspers CEO Bob van Dijk said China’s tech scene has been a “bloodbath” in recent months.
* Van Dijk blamed trade tensions between the U.S. and China but said he’s not worried about Tencent.

Elizabeth Schulze
PUBLISHED TUE, JUN 4 2019  12:31 AM EDT

Tencent’s biggest shareholder is bullish on Chinese tech stocks despite the trade war between the U.S. and China.

Naspers, a South African consumer internet company, owns a 31% stake in Chinese tech giant Tencent. In an interview at the Money20/20 Europe conference on Monday, Naspers CEO Bob van Dijk said tech stocks in China, including Tencent, have fallen victim to the trade war between the world’s two biggest economies.

But, he added, the fundamentals of China’s economy remain “very, very strong.”

“The China tech stock scene has been a bloodbath in the last few months,” he said. “I think it has everything to do with trade tensions and that affects everybody. It’s not good, it’s not good for anybody, but in the end if you take a 10-year view, which is what we typically do, the market is there, the innovation is there, so I think the long-term future is bright.”

The KraneShares CSI China Internet exchange-traded fund, which tracks Chinese tech stocks including Baidu, Tencent and Alibaba, has tumbled 14% in the past three months as the U.S and China have ratcheted up tariffs on each others’ goods. Technology has emerged as a heated battleground in the trade conflict as both countries seek to dominate new areas like 5G and artificial intelligence.

Shares of Tencent have fared better this year than in 2018 after Chinese regulators restarted approving video games, a key source of the company’s revenue. In addition to gaming and messaging, Tencent is also growing its payments and cloud services.

Naspers’ van Dijk said he expects tech companies will continue to be targeted in the trade war but added he was “not so worried about Tencent” thanks to its domestic business model.

More details in https://www.cnbc.com/2019/06/04/naspers-...e-war.html

[cyclone]

Vivendi in talks to sell 10% of Universal Music Group to Tencent

Reporting by Sudip Kar-Gupta; Editing by Kirsten Donovan
AUGUST 6, 2019 / 1:18 PM

PARIS (Reuters) - Vivendi is in talks to sell a 10% stake in its prized and lucrative Universal Music Group (UMG) to Chinese tech company Tencent as it seeks to expand its presence in Asia.

UMG is the world’s biggest music label ahead of Sony Music Entertainment and Warner Music, and is home to artists such as Lady Gaga, Taylor Swift, Drake and Kendrick Lamar.

The French media conglomerate said on Tuesday that the deal would give UMG a preliminary equity valuation of 30 billion euros ($33.6 billion) - better than some had forecast - and that Tencent had an option to buy a further 10% of UMG.

Vivendi shares surged 7% as analysts welcomed the progress made on the sale of a stake in UMG and the valuation.

A deal with Tencent would boost UMG’s presence in the tightly controlled Chinese market and fit well with the Chinese company’s Tencent Music Entertainment unit.

“The valuation looks good, and the progress made on the UMG deal is also positive,” said Gregory Moore, fund manager at Keren Finance, which owns Vivendi shares.

Vivendi’s Chief Executive Officer Arnaud de Puyfontaine said last month that proceeds of the sale of up to 50% of UMG would be used for bolt-on acquisitions and “significant” share buybacks.

Controlled by billionaire Vincent Bollore, Vivendi is seeking to cash in on the growing public thirst for subscription and ad-based music streaming services, which have propelled UMG’s profits over the last four years.

More details in https://www.reuters.com/article/us-viven...SKCN1UW0HN

[cyclone]

Tencent takes 29% stake in computer games maker Funcom

Reporting by Terje Solsvik,
SEPTEMBER 30, 2019 / 3:12 PM

OSLO (Reuters) - China’s Tencent Holding Ltd (0700.HK) has agreed to buy a 29% stake in Oslo-listed computer games developer Funcom (FUNCOM.OL), becoming the biggest shareholder, Funcom said on Monday.

Tencent, itself a major distributor of online games, bought the shares from KGJ Capital AS at a 21.8% premium over Friday’s closing price, valuing Funcom at 1.22 billion Norwegian crowns ($134.33 million).

Based in the Netherlands, Funcom is the developer of a range of online games, including adaptations of the ‘Conan the Barbarian’ franchise.

More details in https://www.reuters.com/article/uk-funco...SKBN1WF0QE

[cyclone]

Mystery Tencent sell-off wipes billions off Naspers, Prosus

Jeanny Yu, with additional reporting by Fin24
Oct 24 2019 08:08

China's biggest online platform Tencent’s accelerating sell-off could get a lot worse if the stock fails to hold above its key support level.

There’s a risk that will happen Thursday: Asia’s biggest stock was down 0.6% in Hong Kong as of 1:03 p.m. local time, despite an otherwise upbeat stock market.

Tencent is now trading below the key level of HK$320 that supported its shares on three occasions this year. The stock has lost about 20% since a peak in April, equivalent to some $93 billion in market value.

Naspers, which via its new digital company Prosus owns a 31% stake in Tencent, is also feeling the pain. Both shares fell by more than 5% yesterday, losing R145 billion of their combined market value in a single day.

While the Tencent shares have been stuck in a downtrend for months, selling was particularly aggressive Wednesday despite no apparent trigger.

Theories circulating round some trading floors included souring sentiment from investors in China, as well as concern that Tencent’s decision to air National Basketball Association games may backfire.

Adding to jitters this week was a local media report that China is considering revising a law to control young people’s online gaming activities -- a business that remains one of Tencent’s most profitable.

The Internet giant will report third quarter earnings on November 13.



Prosus, which is currently trading at around R1,020, has now lost almost 18% of its value since its listing in Amsterdam and on the JSE mid-September.

More details in https://www.fin24.com/Companies/ICT/myst...s-20191024