To The Moon

🌟🌟🌟Tencent $TENCENT(00700)$  $Tencent Holding Ltd.(TCEHY)$  $Tencent HK SDR 10to1(HTCD.SI)$ has just released an Excellent Q3 24 Earnings report on November 13 2024.

Tencent Total revenue was RMB 167.2 billion (USD 23.9 billion) up 8% compared to previous year quarter.  Gross Profit was RMB 88.8 billion (USD 12.7 billion) up 16% year over year. 

On a non IFRS basis which is intended to reflect core earnings by excluding certain one time and /or non cash items, Tencent's Operating Profit was RMB 61.3 billion (USD 8.7 billion), up 19% year over year.  Operating margin increased to 37% from 33% last year. 

Profit for the quarter was RMB 60.9 billion (USD 8.7 billion) up 33% year over year.  Profit attributable to shareholders for the quarter was RMB 59.8 billion (USD 8.5 Billion) up 33% year over year.  Basic earnings per share was RMB 6.475.  Diluted earnings per share was RMB 6.340.

Total cash was RMB 425.5 billion (USD 60.7 billion) and free cash flow was RMB 58.5 billion (USD 8.3 billion), an increase of 14% year over year. 

Tencent's Fair Value of its share holdings in listed investee companies which excludes subsidiaries was RMB 612.5 billion (USD 87.4 billion) and the book value of its share holdings in unlisted investee companies was RMB 327.7 billion (USD 46.8 billion). 

Tencent repurchased 94.9 million shares on the Hong Kong Stock Exchange worth HKD 35.9 billion for the quarter. 

Tencent met the consensus analyst estimate for revenue.  It beats the expectations for Net Income at RMB 53.2 billion (USD 7.4 billion) versus expectations of RMB 52.9 billion (USD 7.3 billion).

Tencent's revenue growth was aided by a 14% rise for its domestic gaming business which brought in RMB 37 billion (USD 5.1 billion).  This was an excellent result since it only posted 9% growth in the previous quarter.  What helped greatly was the new popular game "Black Myth: Wukong".

Chairman and CEO of Tencent, Ma Huateng said that Tencent delivered robust revenue growth in its  games business which was underpinned by consistent performance of evergreen games globally and contribution from new games with evergreen potential.  Tencent has upgraded its ECommerce strategy around Mini Shops, to create a unified and trustworthy transaction experience spanning the entire Weixin ecosystem. 

Tencent is increasingly seeing tangible benefits of deploying AI across its products and operations including marketing services and cloud.  It will continue to invest in AI technology, tools and solutions that assist users and partners. 

Using large language model capabilities, Weixin Search facilitated the understanding of complex  queries and content, enhancing the relevance of search results. 

Music subscriptions increased 16% year over year to 119 million, benefiting from enhanced algorithms, enriched contents and upgraded audio quality. 

Tencent's flagship evergreen games in Domestic markets, Honour of Kings and Peacekeeper Elite delivered healthy year on year growth in gross receipts.  Other evergreen games Naruto Mobile and Valorant reached new highs in quarterly average DAU.  Tencent has  released Delta Force, its first multi platform first person shooter, achieved high average user daily time spent and retention rates. 

In international markets, Valorant expanded from PC to PlayStation and XBox with the launch of its console version in 5 key international markets.  This has contributed to the game growing gross receipts by over 30% year on year during the quarter. 

Tencent has released Tencent Hunyuan Turbo which is an upgraded foundation model using a heterogeneous Mixture of Experts architecture.  This has doubled training and inference efficiency and halved inference cost compared to its predecessor Tencent Hunyuan Pro. 

Revenues from Marketing Services were RMB 30.0 billion for  the quarter, up 17% year on year.  This was driven by robust advertiser demand for Video Accounts, Mini Programs and Weixin Search inventories.  Advertising spending from games and ECommerce categories also increased year on year. 

Revenues from Fintech and Business Services rose by 2% year on year to RMB 53.1 billion for the quarter.  Business Services revenues were up year on year, driven by growth in cloud services revenues and ECommerce technology service fees. 

Performance wise Tencent HK (0700)is up 35% year todate and in 2023 it has risen by 27%.  TCEHY (US) is up 38% year todate and 25% in 2023.

Wall Street Analysts are bullish on Tencent with a Strong Buy rating.  This is due to Tencent's wide moat which is based on network effects around its massive user base.  Unlike other messaging apps, WeChat is a platform for daily life and work.  Through its in-app features, users can play games, read news, perform searches, watch videos, listen to music and shop.  As of June 2024, WeChat users numbered 1.3 billion, effectively covering almost the entire population in China. 

As a Singaporean, I prefer to invest in the new Tencent SDR  $Tencent HK SDR 10to1(HTCD.SI)$ as it is being  listed on a 10 to 1 ratio.  At the last closing price of SGD 6.94 on Friday, my minimum investment would be SGD 694.00 per lot of 100 shares. If I was to invest directly in Tencent Hong Kong I would have to pay 10 times that amount.   I do not have to worry about conversion rates and even receive my dividends in Singapore dollars.   The current dividend yield is 0.85% paid annually. 

There is also an added incentive currently to invest in $Tencent HK SDR 10to1(HTCD.SI)$ as Tiger Brokers have a commission free promotion for all SDRs until 31 December 2024.

As a small investor, I am really thrilled that I can finally invest in Tencent as I believe that this wonderful Chinese conglomerate has lots of exponential growth ahead.   When I invest in Tencent, I am investing in one of the highest grossing multimedia companies in the world based on its revenue.  Tencent is also the world's largest company in the video game industry.  It has created an unique ecosystem that links social media, games, media and messaging that will continue to generate consistent returns for the long term. 

The current stimulus measures by the Chinese authorities will also provide  an added impetus to power up Chinese stocks especially Tencent to new heights. 

Tencent is one Chinese stock that I have always wanted to invest and the time is NOW! 

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