TCEHY Stock Recent News

Earlier this week, many technology stocks sold off sharply on news of DeepSeek R1, the groundbreaking, low-cost AI model from China that materially lowered the cost of deploying AI.

Tencent's WeChat is a central hub in China, driving multiple revenue streams and offering a significant moat that Western tech giants envy. I prefer investing in Tencent through Prosus, which offers a discounted entry and benefits from Dutch tax laws and strategic buybacks. Prosus' double-buyback strategy enhances value creation by selling Tencent shares to repurchase its own undervalued shares, creating a compelling investment opportunity.

Ubisoft cut its 2024-2025 fiscal year guidance due to poor management execution and game launch delays, notably Assassin's Creed Shadows. Tencent is a likely buyer for Ubisoft, with the appointment of lead advisors indicating the deal is beyond the exploratory stage. Acquiring Ubisoft could add RMB 4bn to Tencent's gaming revenue, addressing its innovation challenges and aging IP portfolio.

Tencent shares present a buying opportunity despite U.S. blacklisting, as the company's fundamentals remain strong and minimally reliant on U.S. capital or technology. Tencent's aggressive buyback of HK$1.5 billion during the price drop demonstrates confidence and aims to capitalize on temporary price pressure. Strong financial performance with 7% revenue growth and 24% operating income increase, highlighting efficiency and profit expansion momentum into 2025.

Tencent's strong social media and fintech segments, coupled with a positive gross profit trend, underline favorable business trends. TCEHY's core value-added services and fintech segment are driving significant revenue and gross profit growth. The Company's valuation is highly attractive, trading at a low forward P/E ratio of 11.0x, and the company generates billions of dollars each quarter in free cash flow.

Eugene Hsiao, head of China equity strategy at Macquarie Capital, says "my best guess here is Tencent and CATL are not major suppliers to the U.S. military, hence the economic risk for them in the near term is fairly minimal, but I do think the 'oh no' moment really comes if this expands."

Prosus N.V. stock trades at a significant discount to its NAV, which primarily consists of Tencent Holdings Limited shares. Tencent itself has underperformed recently, meaning that Prosus potentially offers a “double discount” opportunity for value investors. I don't think Prosus can eliminate its NAV discount any time soon, but moves such as the Despegar.com acquisition are incrementally small steps in the right direction.

In 3Q24, TCEHY generated RMB 167.2 billion, posting revenue growth of 8.13% y/y and 3.7% q/q. During this period, operating and net margins have expanded while FCF margin remains high. Currently, TCEHY is facing multiple headwinds due to geopolitical tensions and China's deteriorating economy. Recently, the US has added TCEHY to the Chinese military blacklist, impacting its valuation and investor sentiment. That being said, TCEHY continues to demonstrate robust topline growth and operational excellence. The company has multiple initiatives to ensure stability and growth.

Tencent Holdings Ltd., China's tech giant and social media behemoth, is navigating turbulent waters following its inclusion on a list over alleged ties to the Chinese military.

The Defense Department added video game maker Tencent Holdings to its "blacklist" of companies doing business in the U.S. while allegedly aiding the Chinese military.