Company Update - Ubisoft revised its guidance for the 2024-2025 fiscal year, with net bookings expected to be EUR1 9bn and Q3FY2024-2025 bookings projected at EUR300mn [4] Industry Expertise - Astrada Advisors specializes in technology, media, internet, and consumer sectors across North America and Asia, leveraging extensive local and global experience to identify high-potential investments [2] - The company integrates rigorous fundamental analysis with data-driven insights to provide a nuanced understanding of key trends, growth drivers, and competitive landscapes [2] Research Approach - Astrada Advisors focuses on delivering actionable recommendations to enhance portfolio performance and uncover alpha opportunities, supported by a strong track record in investment research [2] - The research aims to empower investors with timely insights and a comprehensive view of industry dynamics, particularly in volatile markets and emerging trends [2]

Core Viewpoint - Tencent shares are considered a Buy due to attractive buyback activity, resulting in a 32% return since March 2024, outperforming the S&P 500's 13% gain [1] Summary by Relevant Sections - **Company Performance** - Tencent shares have returned approximately 32% since the publication of the article in March 2024 [1] - This performance significantly exceeds the S&P 500's return of 13% during the same period [1] - **Investment Activity** - The article highlights the importance of buyback activity as a factor contributing to the positive performance of Tencent shares [1]

Company Overview - Tencent Holdings Limited is a growing Chinese tech enterprise with considerable scale and favorable business trends, particularly in Fintech [1] - The company operates in social media and Fintech sectors, showing very positive gross margin trends [1] Investment Focus - The analyst focuses on high-risk, high-reward situations, primarily in the technology markets [1] - The analyst's portfolio is concentrated on companies with asymmetric long-term upside, including Bitcoin, Tesla, Google, Amazon, and Nvidia [1] Analyst's Position - The analyst holds a beneficial long position in Tencent Holdings Limited (TCEHY) through stock ownership, options, or other derivatives [2]

Group 1: Ian's Insider Corner Features - Membership includes access to initiation reports for new stocks, an active chat room, weekly updates, and direct responses to questions [1] - Features of the group include the Weekend Digest, which covers new ideas, updates on current holdings, macro analysis, trade alerts, and direct access to Ian [1] Group 2: Ian Bezek's Background and Expertise - Ian Bezek is a former hedge fund analyst at Kerrisdale Capital [2] - He has spent a decade living in Latin America, conducting on-the-ground research for investors interested in markets such as Mexico, Colombia, and Chile [2] - He specializes in high-quality compounders and growth stocks at reasonable prices in the US and other developed markets [2]

Investment Philosophy - The investment philosophy is rooted in fundamental bottom-up analysis and quantitative modelling [1] - The focus is on identifying perception gaps to capitalize on over-pessimism and excessive exuberance [1] - The objective is to identify asymmetric opportunities for investment [1] Analyst's Background - The analyst has over 7 years of experience in the buy-side [1] - The analyst is associated with Selendis Research, which is closely linked to Seven Insights [1] Disclosure and Compensation - The analyst has no stock, option, or derivative positions in the mentioned companies but may initiate a long position in TCEHY within the next 72 hours [1] - The article expresses the analyst's own opinions and is not compensated by any company mentioned [1]

Group 1 - The U.S. Department of Defense has added Tencent Holdings to its blacklist of companies allegedly aiding the Chinese military, as part of the annual update required under the NDAA of FY2021 [1] - The blacklist now includes 134 companies, serving as a warning to American firms against collaboration with these Chinese entities, which can damage their reputations [2] - Following the announcement, Tencent's shares fell by 7.3%, resulting in a loss of approximately HK$275 billion ($35.4 billion) in market value [3] Group 2 - Tencent has labeled the DOD's decision as a "mistake" and stated that it would seek to correct its inclusion on the blacklist, potentially through legal actions [4]

Group 1 - Tencent is a dominant online games operator in China, indicating its strong market position in the gaming industry [1] - As the online game market matures, Tencent is expanding into other growth areas such as marketing services and FinTech markets, showcasing its diversification strategy [1]

Economic Conditions in China - The Caixin Manufacturing PMI fell from 51.5 in November to 50.5 in December, indicating a decline in manufacturing activity and staffing levels for the fourth consecutive month due to weakened overseas demand [2] - The Caixin Services PMI also showed a decline, with service providers cutting staffing levels for the first time since August, reflecting concerns about international trade and competition [2] Labor Market and Consumer Sentiment - Declining employment levels and muted consumer confidence are significant challenges for Beijing's efforts to stimulate the economy, with the youth unemployment rate at 16.1% in November 2024, well above the national rate of 5% [3] - Consumer confidence dropped near historical lows in Q3 2024, which may negatively impact private consumption and demand, necessitating policy measures targeting household income to boost confidence [4] US-China Relations and Economic Implications - Improving US-China relations could be crucial for China's economic recovery, potentially easing trade tensions and boosting private sector sentiment, which in turn may drive job creation and support consumer confidence [5] - The Biden administration's actions, including targeting Chinese companies, may complicate these relations, as companies on the Section 1260H List could face US sanctions, impacting their operations and market perception [6][7] Market Performance - The Hang Seng Index is down 3.74% year-to-date, while the CSI 300 and Shanghai Composite have declined by 4.30% and 4.62%, respectively, reflecting market concerns over the potential impact of a US-China trade war on China's economy [10]

Companies Added to Pentagon's Military-Linked List - Tencent Holdings Ltd was added to the US government list of military-linked companies, causing a 7% drop in its Hong Kong-listed shares [1] - Contemporary Amperex Technology (CATL) was also added to the list, resulting in a 3% decline in its Shanghai-listed shares [2] - Other companies on the list include 360 Security Technology, Huawei, and BGI Genomics [8] Impact of the Pentagon's List - The designation can hurt companies' international operations as potential partners assess new risks [3] - Being on the list may impact investment or factory construction in America, and companies working with blacklisted firms may be stopped from participating in federal projects or investing in key US industries [4] Company Responses - Tencent stated that its inclusion on the list is a mistake and that it is not a military company or supplier, with no impact on its business [5] - CATL also claimed that its inclusion on the list is a mistake but did not respond to a request for comment [5] Company Backgrounds - Tencent, cofounded by billionaire Pony Ma with a net worth of $42.5 billion, has been expanding overseas and has stakes in international companies like Spotify and Supercell [6] - CATL, founded by Robin Zeng with a fortune of $35.9 billion, has been working with Ford to build a battery factory in Michigan and is a key battery supplier to Tesla [7] Removal from the List - Companies on the Pentagon's list can try to get off it, as seen with Xiaomi in 2021, but other companies like DJI and Hesai Technology remain on the list [8]

While the Chinese internet giant Tencent is best-known for its super-app WeChat, it’s also a major investor in U.S. tech companies and startups. Some of its most notable and still active investments include Reddit, Snap, and Fortnite creator Epic Games.Things might get a little awkward, though, because Tencent was designated a “Chinese military company” by the U.S. Department of Defense on Monday. The listing serves as a warning from the U.S. about companies it claims are involved in Chinese “military-civil ...