Do you have Tencent to spare?

Recent Tencent News

Tencent is enjoying some good media coverage thanks to a strong earnings announced few days ago.

Earnings summary of Tencent (X user Eugene Ng)

Summary from X user Visual Capitalist

Tencent Q3 FY24:

Revenue +8% Y/Y to RMB167B ($23B).

🎮 Gaming +13%

💬 Social Networks +4%

📢 Marketing Services +17%

💳 Business +2%

Weixin/WeChat: 1.38M MAU (+3% Y/Y).

This is a good summary of Earnings by Grok:

Tencent Holdings Limited reported its third-quarter earnings for fiscal year 2024, showcasing a performance that generally met or slightly exceeded market expectations. Here are key highlights from these earnings:

• Revenue: Tencent's revenue increased by 8% year-over-year to RMB167.193 billion ($23 billion), surpassing the estimated RMB154.625 billion. This growth was driven by various segments:

  Gaming: Saw a 13% increase, indicating a robust recovery or maintenance of their core gaming business.

  Social Networks: Grew by 4%, suggesting steady usage and monetization of their platforms like WeChat.

  Marketing Services: Experienced a significant 17% rise, pointing to strong advertising demand possibly due to enhanced AI-powered advertising infrastructure.

  Business Services (Fintech & Cloud): Showed a modest 2% growth, likely reflecting broader economic conditions affecting consumer spending in China.

• Net Income: The net income for the quarter was RMB53.23 billion, exceeding the estimated RMB36.182 billion, with a corresponding earnings per share (EPS) of 5.6444 yuan, up from 3.752 yuan in the previous year.

• User Metrics:

  Monthly Active Users (MAU) for Weixin/WeChat grew by 3% to 1.38 billion, highlighting continued strong engagement with their primary messaging app.

• Financial Services:

  Wealth management services saw revenue growth due to more users and higher aggregated customer assets, while payment services revenues slightly declined, reflecting subdued consumer spending.

• Overall Commentary:

  Tencent's ability to increase profits despite a flat payment sector shows resilience in other business areas, particularly in gaming and advertising. The company's strategic focus on AI and cloud infrastructure seems to be paying off in terms of revenue from marketing services.

  The solid business model of Tencent continues to be evident, with a notable increase in operational profit, suggesting efficient cost management or better revenue streams from high-margin businesses.

These results reflect Tencent's ongoing adaptation to the complex market dynamics in China, balancing growth in lucrative areas like gaming and advertising with the challenges in fintech due to economic conditions affecting consumer behavior.

Here are the year-over-year improvements for Tencent's financial metrics based on the information from their latest quarterly earnings:

• Revenue: Increased by 8%.

• Operating Profit: There is an increase of 20% with Adjusted EBITDA up by 14% and Non-GAAP EBIT up by 19%.

• Earnings Per Share (EPS): Improved significantly, with an increase to 5.6444 yuan from 3.752 yuan last year, which represents a substantial 50% increase.

• Operational cash flow (OCF) increased by 20%.

When the operating profit grew 20% from a revenue growth of 8%, this implies that there is better cost management for Tencent. This is a very good performance.

Personally, I am happy with the progress of this business and I am glad to be an investor. Do you think that you should add Tencent to your portfolio too?

@TigerStars

$TENCENT(00700)$

$Tencent Holding Ltd.(TCEHY)$