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Tencent Holdings Limited (HK:0700)
:0700
Top Page
Tencent Holdings Limited
(OTC:0700)
77Outperform
Positive Factors
Financial Performance
Tencent's non-IFRS earnings rose by 30%, driven by strong games and ads revenue, surpassing market estimates.
Growth Potential
The monetization of the WeChat ecosystem represents strong long-term growth potential, driven by Video Accounts and Mini Games.
Shareholder Returns
Tencent plans to increase its annual dividend by 32% and repurchase at least HK$80bn shares, signaling strong shareholder returns.
Negative Factors
Cloud Business
Cloud growth was slow due to prioritizing GPU for internal use, which may affect short-term revenue growth.
Profit Margins
Increased AI investment is expected to weigh on Tencent's margin expansion, slowing down the pace of growth.
Regulatory Risks
Potential risks include regulatory tightening on the game approval process and anti-trust-related market practices.
Tencent Holdings Limited (0700) vs. S&P 500 (SPY)
Market Cap
$4.18T
Dividend Yield0.73%
Average Volume (3M)34.63M
Price to Earnings (P/E)20.3
Beta (1Y)1.19
Revenue Growth6.35%
EPS Growth68.85%
CountryHK
Employees110,558
SectorCommunication Services
Sector Strength76
IndustryInternet Content & Information
Share Statistics
EPS (TTM)22.71
Shares Outstanding9,203,373,000
10 Day Avg. Volume46,175,744
30 Day Avg. Volume34,630,039
Financial Highlights & Ratios
PEG Ratio0.29
Price to Book (P/B)N/A
Price to Sales (P/S)5.20
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$635.83Price Target Upside34.09% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
Tencent Holdings Limited Business Overview & Revenue Model
Company DescriptionTencent Holdings Limited, an investment holding company, provides value-added services (VAS) and Online advertising services in Mainland China and internationally. The company operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. It offers online games and social network services; FinTech and cloud services, and online advertising services. The company is also involved in the production, investment, and distribution of films and television programs for third parties, as well as copyrights licensing, merchandise sales, and other activities. n addition, it develops software; develops and operates online games; and provides information technology, information system integration, asset management, online literature, and online music entertainment services. Tencent Holdings Limited company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.
How the Company Makes MoneyTencent generates revenue through multiple streams. The primary source of income is its gaming division, where it earns from in-game purchases, subscriptions, and royalties from both its own games and those of companies in which it holds stakes. Social networks like WeChat and QQ contribute to revenue through advertising services and value-added services, including digital content subscriptions and virtual goods sales. Additionally, Tencent's fintech services, under the brand WeChat Pay, provide revenue through transaction fees and financial services. The company also invests in other tech and media companies, gaining profits through dividends and capital gains. Strategic partnerships and ventures further enhance its earnings potential by tapping into new markets and technologies.
Tencent Holdings Limited Financial Statement Overview
Summary
Income Statement
Balance Sheet
Cash Flow
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 660.26B | 609.01B | 554.55B | 560.12B | 482.06B | Gross Profit |
| 349.25B | 293.11B | 238.75B | 245.94B | 221.53B | EBIT |
| 208.10B | 160.07B | 87.92B | 108.58B | 133.41B | EBITDA |
| 231.96B | 183.94B | 134.30B | 313.65B | 238.25B | Net Income Common Stockholders |
| 194.07B | 115.22B | 188.24B | 224.82B | 159.85B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 343.16B | 379.15B | 289.48B | 262.35B | 227.88B | Total Assets |
| 1.78T | 1.58T | 1.58T | 1.61T | 1.33T | Total Debt |
| 358.11B | 371.24B | 359.14B | 323.48B | 262.46B | Net Debt |
| 225.59B | 198.92B | 202.40B | 155.51B | 109.67B | Total Liabilities |
| 727.10B | 703.57B | 795.27B | 735.67B | 555.38B | Stockholders Equity |
| 973.55B | 808.59B | 721.39B | 806.30B | 703.98B |
| Cash Flow | Free Cash Flow | |||
| 181.76B | 174.56B | 95.24B | 113.02B | 127.52B | Operating Cash Flow |
| 258.52B | 221.96B | 146.09B | 175.19B | 194.12B | Investing Cash Flow |
| -122.19B | -125.16B | -104.87B | -178.55B | -181.96B | Financing Cash Flow |
| -176.49B | -82.57B | -59.95B | 21.62B | 13.65B |
Tencent Holdings Limited Technical Analysis
Positive
474.20
Price Trends
488.98
Negative
445.14
Positive
419.58
Positive
Market Momentum
-10.31
Positive
49.89
Neutral
89.24
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0700, the sentiment is Positive. The current price of 474.2 is below the 20-day moving average (MA) of 474.93, below the 50-day MA of 488.98, and above the 200-day MA of 419.58, indicating a neutral trend. The MACD of -10.31 indicates Positive momentum. The RSI at 49.89 is Neutral, neither overbought nor oversold. The STOCH value of 89.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0700.
Tencent Holdings Limited Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | HK$2.10T | 15.88 | 11.98% | 0.89% | 3.92% | 27.80% | |
77 Outperform | $4.18T | 20.28 | 21.80% | 0.73% | 6.35% | 68.85% | |
74 Outperform | HK$466.16B | 10.06 | 17.58% | 2.28% | 4.83% | 76.96% | |
58 Neutral | $13.14B | 6.83 | -2.45% | 3.85% | 2.36% | -36.75% |
* Communication Services Sector Average
Performance Comparison
HK:0700
Tencent Holdings Limited
474.20
132.95
38.96%
MPNGF
Meituan Dianping
17.51
3.17
22.11%
KSFTF
Kingsoft
4.94
1.74
54.38%
XIACF
Xiaomi
6.11
3.98
186.85%
HK:9618
JD.com, Inc. Class A
132.40
24.02
22.16%
HK:9988
Alibaba Group Holding Ltd.
116.00
45.04
63.47%
Tencent Holdings Limited Earnings Call Summary
Earnings Call Date: Mar 19, 2025 | % Change Since: -12.35% | Next Earnings Date: May 14, 2025
Earnings Call Sentiment Positive
Tencent demonstrated strong financial performance with double-digit revenue growth, significant advancements in AI initiatives, and robust growth in gaming and advertising. However, supply constraints in AI, pricing pressures in commercial payments, and high CapEx impacting free cash flow present challenges.Highlights
Strong Financial Performance
Total revenue for Q4 2024 was RMB172 billion, up 11% year-on-year. Gross profit was RMB91 billion, up 17% year-on-year. Non-IFRS operating profit was RMB59 billion, up 21% year-on-year, and non-IFRS net profit attributable to equity holders was RMB55 billion, up 30% year-on-year.
AI Initiatives and Growth
Tencent has advanced its HunYuan AI capabilities, with significant investments in AI infrastructure, algorithm, and training. Yuanbao, an AI native application, increased its DAU 20-fold and became the third highest AI native mobile application in China by DAU.
Gaming and Content Leadership
Domestic games revenue grew 23% year-on-year. International games revenue increased 15% year-on-year. Tencent Music subscribers grew to 121 million, and several drama series ranked among the top five in the industry.
Advertising Revenue Growth
Marketing services revenue grew 17% to RMB35 billion in Q4, driven by AI enhancements in ad targeting and increased engagement in Video Accounts and Weixin Search.
Shareholder Returns
Tencent returned HKD32 billion in cash dividends and repurchased HKD112 billion worth of shares in 2024. They plan to pay HKD4.5 per share in dividends in 2025 and repurchase HKD80 billion worth of stock.
Lowlights
Supply Constraints in AI
Supply constraints in GPUs limited Tencent's ability to fully capture AI service demand in Q1 2025. This has temporarily constrained the growth of cloud services revenue.
Pressure in Commercial Payments
Although transaction volumes increased, there was significant pricing pressure on ASP, keeping commercial payment values roughly stable year-on-year.
High CapEx Impact on Free Cash Flow
Operating CapEx increased 421% year-on-year to RMB34.9 billion, primarily due to AI investments, which led to a significant decrease in free cash flow, down 87% year-on-year.
Company Guidance
During the Tencent Holdings Limited 2024 Fourth Quarter and Annual Results Announcement Webinar, the management provided detailed guidance on their financial performance and future strategies. The company reported a total revenue of RMB172 billion, marking an 11% year-on-year increase, with a gross profit of RMB91 billion, up 17% year-on-year. Their non-IFRS operating profit rose to RMB59 billion, reflecting a 21% increase, while the non-IFRS net profit attributable to equity holders reached RMB55 billion, up 30% year-on-year. Tencent's strategic focus on AI was discussed extensively, highlighting advancements in their HunYuan capabilities and the integration of AI into various business segments. The company also emphasized its commitment to shareholder returns, distributing HKD32 billion in cash dividends and repurchasing HKD112 billion worth of shares. For 2025, Tencent plans a further HKD80 billion in buybacks. Additionally, the management outlined their investment in AI infrastructure, increasing annual CapEx to $10.7 billion, which is approximately 12% of their revenue, and they expect CapEx to remain in the low-teens percentage of revenue.Tencent Holdings Limited Corporate Events
Tencent Announces 2025 Annual General Meeting Agenda
Apr 8, 2025
Tencent Holdings Limited has announced its upcoming Annual General Meeting (AGM) scheduled for May 14, 2025, in Hong Kong. The meeting will address several key issues, including the consideration of audited financial statements, the declaration of a final dividend, the re-election of directors, and the re-appointment of auditors. Additionally, shareholders will vote on granting a general mandate to the company’s directors to allot and issue shares, which could impact the company’s strategic flexibility and capital structure.
Tencent Announces Upcoming Board Meeting for Q1 Results
Mar 25, 2025
Tencent Holdings Limited has announced that its board of directors will meet on May 14, 2025, to approve the unaudited first quarter results for the period ending March 31, 2025, and to consider the payment of a dividend. This meeting is significant as it will provide insights into the company’s financial performance and potential shareholder returns, impacting its market positioning and stakeholder interests.
Tencent Grants Over 6 Million Share Options to Employees
Mar 20, 2025
Tencent Holdings Limited has announced the grant of 6,663,390 share options to its employees under the company’s Share Option Scheme. This move is aimed at retaining and incentivizing employees, including senior management, by offering them the opportunity to subscribe for shares at an exercise price of HK$526.9 per share. The options have a vesting period ranging from approximately 22 to 48 months and are intended to encourage long-term commitment and contribution to the company’s growth.
Tencent Grants Over 16 Million Shares to Employees Under Award Scheme
Mar 20, 2025
Tencent Holdings Limited announced the grant of 16,889,865 awarded shares to employee participants under its Share Award Scheme, representing approximately 0.1836% of the total shares in issue as of the announcement date. This move is part of Tencent’s strategy to retain and incentivize its employees, including senior management, by offering a vesting period ranging from 14 to 60 months, thus encouraging continuous contribution to the company’s long-term success and growth.
Tencent Declares Final Dividend for 2024
Mar 19, 2025
Tencent Holdings Limited announced a final cash dividend of HKD 4.5 per share for the financial year ending December 31, 2024. The dividend will be paid on May 30, 2025, following shareholder approval on May 14, 2025. This announcement reflects Tencent’s continued commitment to delivering value to its shareholders, potentially strengthening its market position and investor confidence.
Tencent Reports Strong Financial Growth in 2024
Mar 19, 2025
Tencent Holdings Limited announced its audited consolidated results for the year ending December 31, 2024, showcasing a robust financial performance. The company reported an 8% increase in revenues to RMB 660,257 million and a 30% rise in operating profit to RMB 208,099 million, reflecting strong growth in its core business areas. The profit attributable to equity holders surged by 68% to RMB 194,073 million, indicating a significant improvement in profitability. This strong financial performance underscores Tencent’s strategic positioning in the technology sector and its ability to capitalize on market opportunities, which may positively impact its stakeholders and enhance its competitive edge.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.