Tencent: More Powerful Than You Think OTCMKTS:TCEHY

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Also, by looking at the rate of this item, rather than the actual dollar value, it makes for easier comparisons across the industry and peers. Projected EPS Growth looks at the estimated growth rate for one year. It takes the consensus estimate for the current fiscal year (F1) divided by the EPS for the last completed fiscal year (F0) (actual if reported, the consensus if not). Debt to Equity (or D/E ratio) is total liabilities divided by total shareholder equity.

However, Washington has recognized its popularity and the danger it poses – i.e., TikTok displacing Facebook as the global dominant social media platform would diminish the ability of the U.S. to control the Western narrative. Former President Trump’s attempts to bring down TikTok must have highlighted to Beijing the importance of having more alternatives. Institutional investors could be comforted by Tencent Holdings Ltd’s solid free cash flow of $17.5 billion and an FCF yield of 3.9%. This is impressive when compared with Sea Limited (SE), affectionately named the Tencent of Southeast Asia and “Baby Tencent” by some market players. Rather than experiencing job losses, the total employment at “A-list tech companies such as Alibaba, Tencent, ByteDance (BDNCE), JD.com (JD), Pinduoduo (PDD), and Ant Group… has increased steadily,” according to a statement by CAC.

  1. The Sales to Assets ratio (or Sales to Total Assets or S/TA for short) shows how much sales are generated from a company’s assets.
  2. Seeing how a company makes use of its equity, and the return generated on it, is an important measure to look at.
  3. The point here is not to discourage those who have invested in Apple (this is just one of many examples I could have given), but to bring out an interesting food for thought about how the market is reacting hypocritically about China risk.
  4. Including the Zacks Rank, Zacks Industry Rank, Style Scores, the Price, Consensus & Surprise chart, graphical estimate analysis and how a stocks stacks up to its peers.
  5. Personally, I don’t doubt that the situation is getting difficult in China, but at the same time I don’t think this is the moment to panic.

Earnings estimate revisions are the most important factor influencing stocks prices. It’s an integral part of the Zacks Rank and a critical part in effective stock evaluation. If a stock’s EPS consensus estimate is $1.10 now vs. $1.00 the week before, that will be reflected as a 10% change. If, on the other hand, it went from $1.00 to 90 cents, that would be a -10% change in the consensus estimate revision.

The push for Chinese alternatives provides Tencent offerings with a good shot at global monetization

It’s packed with all of the company’s key stats and salient decision making information. Including the Zacks Rank, Zacks Industry Rank, Style Scores, the Price, Consensus & Surprise chart, graphical estimate analysis and how a stocks stacks up to its peers. You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. He also focused on the potential of live-streaming e-commerce, aiming to evolve WeChat, Tencent’s robust platform with a vast user base and ecosystem, to discover new growth avenues similar to ByteDance’s Douyin.

The EV/EBITDA ratio is a valuation multiple and is often used in addition, or as an alternative, to the P/E ratio. And like the P/E ratio, a lower number is typically considered ‘better’ than a higher number. The detailed multi-page Analyst report does an even deeper dive on the company’s vital statistics. It also includes an industry comparison table to see how your stock compares to its expanded industry, and the S&P 500.

Products and services

In short, even if the domestic games segment slows down it could be offset by the excellent opportunities internationally. The international gaming business’ growth was supported by new content for Valorant and Clash Royale, an adjustment of its deferred revenue at mobile-game developer Supercell, and its consolidation of Warframe developer Digital Extremes. Over the past decade, Tencent has capitalized on the industry shift toward mobile gaming. The firm owns some of the world’s most popular titles, like Honor of Kings and PUBG Mobile.

A dark cloud hangs over a bright business

24% of Tencent shares are owned by institutional investors, representing 38% of the float. Regarding the bearish reports like “large-scale layoffs” happening at Chinese tech giants, we may have forgotten that such moves announced to placate shareholders on management’s cost-cutting endeavors are common in the U.S. as well. Jobs could be quietly added subsequently and outsiders would be none the wiser. There were speculations that the layoff announcements were made to extract concessions from Beijing or simply to signal to the regulators that they should back down on their scrutiny.


(Book value is defined as total assets minus liabilities, preferred stocks, and intangible assets.) In short, this is how much a company is worth. Investors use this metric to determine how a company’s stock price stacks up to its intrinsic value. Tencent generated 15% of its revenue from its advertising business, which sells ads on its core social networking app WeChat (known as Weixin in China), its ad-supported streaming services, and other smaller apps.

Moreover, League of Legends is not the only successful game from this company. Popular names include Valorant (25 million active users in the past 30 days), Teamfight Tactics, and Legends of Runeterra. Riot Games was valued at $2.26 billion in November 2023, well above what Tencent paid. The government has reportedly been https://bigbostrade.com/ probing the use of WeChat Pay in money-laundering schemes, and it might be pressured to spin off the fintech business into a holding company where it can be tightly regulated. Tencent’s online advertising revenue, which accounted for 15% of its top line, tumbled 13% year over year to 21.5 billion yuan ($3.37 billion).

Tencent Holdings Limited, an investment holding company, offers value-added services (VAS), online advertising, fintech, and business services in the People’s Republic of China and internationally. It operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. In addition, the company operates innovation business, which includes artificial intelligences; and discover and develops enterprise and next-generation technologies for food production, energy, and water management application. Tencent Holdings Limited was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holding Limited in February 2004. The company was founded in 1998 and is headquartered in Shenzhen, the People’s Republic of China. That growth was impressive since Baidu (BIDU 0.11%) — which owns China’s top search engine — posted seven straight quarters of revenue declines.

By comparison, Baidu’s (BIDU 0.11%) online marketing revenue rose 1% year over year to 19.1 billion yuan ($3 billion) last quarter. That progress is encouraging, but Tencent’s overseas business could also face regulatory headwinds. India’s regulators have already banned Tencent’s games along with dozens of other Chinese apps, while the Committee on Foreign Investment in the United States has been closely scrutinizing Tencent’s stakes in American gaming companies. Chinese gaming stocks rose on Wednesday to outperform a weak broader market, after Reuters reported China removed a gaming regulatory official. China’s gaming regulator has removed from its website rules it proposed last month aimed at curbing spending and rewards that encourage playing video games, checks by Reuters on Tuesday showed, in a m… Tencent saw a increase in short interest during the month of January.

There is always the possibility that the government may want more control over internet businesses by curbing monetization, limiting collection of user data, or restricting acquisitions. Outside of companies subsidiary of its game division, Tencent as a whole has many major and minor investments in domestic and, since the 2010s, foreign game companies. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed.

The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Baidu, and Tencent Holdings. The 20 Day Average Volume is the how to invest in coca cola average daily trading volume over the last 20 trading days. For example, a regional bank would be classified in the Finance Sector.

Anyway, the valuation is quite depressed and may have discounted an overly negative scenario. After all, Tencent is one of the best companies in the world and is trading at an NTM Market Cap/Free cash flow of only 14.71x. The growth drivers are there, especially in the FinTech, Online Advertising and International Gaming segments. Those moves indicate the Chinese government doesn’t want private digital-payment platforms to overpower state-backed banks. Therefore, investors who expect Tencent to offset the slower growth of its gaming business with the expansion of its fintech business could be sorely disappointed. The only bright spot in Tencent’s report was its fintech and business services segment, which houses WeChat Pay, Tencent Cloud, and its other cloud-based services.

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