[Brokerage Focus] Barclays gives Tencent (TCEHY) an "overweight" rating; its inclusion in the US 1260H list has no direct legal consequences.

Jinwu Finance News | Barclays releases research report, January 6thTencent(TCEHY) is listed on the U.S. Department of Defense's 1260H list (a list of Chinese military companies), but this has no direct legal impact on U.S. investors. Unlike the U.S. Treasury Department's NS-CMIC list (a list of non-SDN Chinese military-industrial complex companies), U.S. investors in companies listed on the latter must withdraw their investments within 12 months.

The bank stated that SenseTime was also included in the 1260H list.SMIC、China Mobile、China Telecom、China UnicomCompanies listed on the Hong Kong Stock Exchange. Tencent responded that its inclusion was incorrect, that it is not a military company or supplier, that its business will not be affected, and that it will communicate with the Ministry of National Defense to clear up misunderstandings. Looking back at history, most companies that were first listed by the Ministry of National Defense eventually ended up on the Ministry of Finance's list, but Xiaomi successfully sued the Ministry of National Defense and was removed from its list, so it was not listed by the Ministry of Finance. The bank further stated that Prosus holds approximately 25% of Tencent's shares and has two seats on the board of directors. It is listed in the Netherlands, and its major shareholder, Naspers, is listed in South Africa. Currently, Tencent's list does not force Prosus to sell Tencent shares. Tencent's ADR is currently trading at $48.11 (January 7), and Barclays has given it an "overweight" rating with a target price of $66 and a potential upside of 37.2%.