Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 486.56 HKD per share [4][13]. Core Views - The company is expected to achieve a revenue of 165.8 billion RMB in Q3 2024, reflecting a year-over-year growth of 7% and a quarter-over-quarter growth of 3% [2]. - The Non-GAAP net profit for Q3 2024 is projected to reach 54.2 billion RMB, indicating a year-over-year increase of 21% but a quarter-over-quarter decrease of 5% [2]. - The report highlights a positive trend in gaming performance, resilient advertising revenue, and a financial services segment impacted by weak consumer spending [2]. Summary by Sections Q3 2024 Performance Forecast - Expected revenue of 165.8 billion RMB, with gaming revenue at 51.5 billion RMB (YoY +12%, QoQ +6%) and social network revenue at 29.9 billion RMB (YoY +1%, QoQ -1%) [2][9]. - Advertising revenue is anticipated to be 29.6 billion RMB (YoY +15%, QoQ -1%), driven by video content, while financial and enterprise services revenue is expected to be 53.7 billion RMB (YoY +3%, QoQ +6%) [2][9]. Earnings Forecast and Investment Recommendations - The company is projected to achieve revenues of 657 billion RMB and 715.1 billion RMB in 2024 and 2025, respectively, with adjusted net profits of 216.3 billion RMB and 242.5 billion RMB [2][3]. - The report emphasizes the strong product cycle in gaming and the resilience of advertising, with potential recovery in financial services as consumer spending rebounds [2][3]. Financial Metrics - The report provides detailed financial projections, including a Non-GAAP EPS of 5.68 RMB for Q3 2024, with a projected growth rate of 22% YoY [2][17]. - The company’s revenue growth rates are forecasted at 7.9% for 2024 and 8.9% for 2025, with a significant increase in adjusted net profit growth of 39.5% in 2024 [3][17].

Company Overview - Tencent Holding Ltd. (TCEHY) currently holds a Momentum Style Score of A, indicating strong momentum potential [2] - The company has a Zacks Rank of 2 (Buy), suggesting a favorable outlook compared to the market [2] Price Performance - TCEHY shares have increased by 6.54% over the past week, while the Zacks Internet - Services industry remained flat [3] - Over the past month, TCEHY's price change is 22.08%, significantly outperforming the industry's 5.17% [3] - In the last quarter, TCEHY shares rose by 18.15%, and over the past year, they increased by 43.17% [4] - In comparison, the S&P 500 has moved 3.54% and 35.24% over the same periods [4] - The average 20-day trading volume for TCEHY is 3,798,429 shares, indicating strong trading activity [4] Earnings Outlook - In the past two months, 2 earnings estimates for TCEHY have been revised upwards, while none have been lowered, boosting the consensus estimate from $2.93 to $3.05 [5] - For the next fiscal year, 2 estimates have also moved upwards with no downward revisions [5] Conclusion - Given the strong price performance and positive earnings outlook, TCEHY is positioned as a promising investment opportunity with a Momentum Score of A [6]

Core Viewpoint - Tencent is experiencing a significant decline in its stock price due to investor concerns over the effectiveness of China's economic stimulus measures, leading to skepticism in the market [1][2] Group 1: Stock Performance - Tencent's share price has dropped by 8.9% to $56.80, remaining approximately 42% below its peak despite some recovery from earlier stimulus-driven gains [1] - The company reported a revenue growth of 8% and a substantial operating income improvement of 27% year-over-year in the latest quarter [1] Group 2: Valuation and Market Position - Tencent currently trades at a price-to-earnings (P/E) ratio of 25.76, with its GF Value score indicating it is fairly valued [2] - The company holds a robust position in the global internet sector, particularly in gaming and social media, which underscores its potential for future growth [2] Group 3: External Pressures - Tencent faces external pressures from macroeconomic conditions and geopolitical tensions, particularly between the U.S. and China, which have deterred U.S. institutional investors [2] - The stock performance of Tencent will remain sensitive to external political and economic factors [2]

Group 1 - Tencent's stock is experiencing significant volatility, with a decline of 8.4% in a single trading session due to uncertainty surrounding China's economic stimulus plans [1][2] - Chinese economic officials have indicated a shift of $28.36 billion from the 2025 budget to support infrastructure projects this year, but investors were expecting more substantial measures [2] - The overall sentiment in the market is negative as investors are skeptical about the extent of future economic support, leading to sell-offs in Tencent and other Chinese stocks [2][3] Group 2 - Despite recent gains from government stimulus, Tencent's stock remains approximately 42% lower than its peak [3] - The company reported year-over-year revenue growth of 8% and operating income growth of 27% in its latest quarter [3] - Tencent's current trading valuation is around 18 times its earnings over the trailing 12 months, which is considered relatively cheap for a company with strong long-term growth potential [3] Group 3 - Geopolitical risks, particularly rising tensions between the U.S. and China, are influencing investor behavior, leading to reduced positions in Chinese companies by U.S. institutional investors [4] - Continued deterioration in U.S.-China relations could exert additional pressure on Chinese stocks, including Tencent [4]

Group 1 - Shares of Ubisoft increased by over 30% following reports of Tencent and the Guillemot family considering a buyout of the company [1][2] - Ubisoft's shares surged 33.5% to approximately $15.57, as reported by FactSet [1] - The company has experienced a significant decline in market value, losing more than half of it this year [1] Group 2 - Ubisoft is known for popular franchises such as "Assassin's Creed" [2] - The company's shares fell to their lowest point in over a decade due to the underperformance of its latest title "Star Wars Outlaws" and the delay of a new "Assassin's Creed" game [2] - CEO Yves Guillemot acknowledged that the company's second quarter performance did not meet expectations [2]

Group 1 - The articles focus on community guidelines aimed at fostering respectful and constructive conversations among users [1][2] - Key rules include prohibiting false information, spam, and abusive language to maintain a civil environment [1] - User accounts may be blocked for repeated violations or discriminatory comments, emphasizing the importance of community protection [2]

Core Viewpoint - Tencent and France's Guillemot family are exploring a potential acquisition of Ubisoft, although discussions are in early stages and may not lead to a transaction [1] Group 1: Acquisition Considerations - A joint effort to privatize Ubisoft is one option being considered [1] - Ubisoft's shares have dropped by 54% this year, resulting in a market value of approximately 1.4 billion euros (1.5 billion dollars) [1] Group 2: Stakeholder Holdings - As of the end of April, Tencent holds 9.2% of the net voting rights in Ubisoft, while the Guillemot family owns about 20.5% [1] Group 3: Market Reaction - The news of a potential acquisition caused a 10% increase in Ubisoft's stock price, leading to a trading halt [1] - Representatives from Ubisoft and the Guillemot family did not provide comments, and a Tencent representative was unavailable for immediate comment [1]

Group 1: ETF Launch and Performance - The Roundhill China Dragons ETF (DRAG) has been launched to track an equal-weight basket of 5 to 10 of China's largest tech companies, including Tencent, Pinduoduo, Alibaba, and others [1] - At market close, DRAG rose by 0.6%, ending at $25.14, indicating strong initial performance [1] - Roundhill Investments highlighted the strong fundamentals and growth advantages of the nine tech companies included in the ETF [1] Group 2: Market Trends and Inflows - This week, $2.5 billion flowed into the four largest China-related ETFs, with KraneShares' KWEB experiencing its largest single-day inflow on record [2] - The surge in inflows follows economic stimulus measures from Beijing, leading to the best single-day performance for Chinese stocks since 2008 [2] - Fund managers are increasingly investing in Chinese equities after years of underinvestment, indicating a shift in market sentiment [2] Group 3: Comparison with Other ETFs - DRAG is noted to have a higher concentration compared to other China-focused ETFs like the $7.9 billion KraneShares CSI China Internet ETF (KWEB) and the $6.4 billion iShares China Large-Cap ETF (FXI) [1] - Among Roundhill's ETFs, the Roundhill Magnificent Seven ETF (MAGS) has performed well, rising 40% since its launch in April 2023 [2] - MAGS is considered the U.S. counterpart to DRAG, showcasing the potential for DRAG's performance if confidence in China's market remains strong [2]

Group 1 - The Chinese stock market has recently shown unusual activity, with several stocks experiencing high single-digit to double-digit increases over consecutive days [1] - Baidu, Inc. is highlighted as one of the companies that has seen significant stock performance [1] Group 2 - The analysis focuses on high-quality companies that can outperform the market in the long run due to competitive advantages and high defensibility [1] - The research is primarily centered on European and North American companies, without restrictions on market capitalization [1]

Group 1 - The author expresses skepticism towards Chinese ADRs, citing concerns over governance and capital allocation standards in Chinese companies [1] - The author has a background in banking and finance, with over five years of experience as an equities analyst, focusing on growth and income stocks [1] - The investment group mentioned aims to provide actionable trading ideas across various asset classes, sectors, and industries, catering to both active and less active investors [1]