In major news on Hong Kong stocks, Tencent Holdings Limited (HK:0700) (TCEHY) delivered robust Q1 results for 2024, driven by its online advertising and business services. Q1 2024 signifies the fifth consecutive quarter of quarterly revenue growth for Tencent. The company’s total revenues amounted to ¥159.5 billion, marking a 6% year-over-year increase. Profit during this period grew by 54% to ¥51.3 billion.
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Year-to-date, Tencent stock has gained 29%.
Tencent Holdings is a technology company that provides digital entertainment and internet value-added services to more than 1 billion customers.
Highlights from Tencent’s Q1 Results
Among Tencent’s segments, revenues from Online Advertising amounted to ¥26.5 billion, reflecting a 26% year-on-year increase. Meanwhile, revenues from Fintech and Business Services grew by 7% to ¥52.3 billion.
On the other hand, the company’s core gaming business is experiencing a significant slowdown due to the levelling off and decline in the popularity of its existing hits. Tencent’s Domestic Games revenue decreased by 2% to ¥34.5 billion compared to Q1 2023. The company noted that revenue from its high-profile games, such as Honour of Kings and Peacekeeper Elite, experienced a decline on a year-over-year basis.
Nonetheless, the decline was mostly balanced out by contributions from recently launched games such as Valorant and Lost Ark, along with strong growth from Fight of the Golden Spatula. International Games revenue was up by 3%.
Additionally, Tencent’s margin growth remained impressive in Q1, with the operating margin rising to 37% from 30% in the prior-year quarter. Similarly, the net margin increased to 32% from 22% in Q1 2023.
Is Tencent Holding a Buy?
According to TipRanks’ rating consensus, 0700 stock has received a Strong Buy rating, backed by 12 Buy and one Hold recommendation. The Tencent share price forecast is HK$417.08, which implies an upside of 10.28% on the current trading level.
