Core Viewpoint - The article discusses the intrinsic value of Tencent Holdings using a self-invented valuation parameter called "Market Earnings Ratio" (市赚率), which is calculated as the ratio of Price-to-Earnings (PE) to Return on Equity (ROE) [1][3]. Group 1: Market Earnings Ratio - The formula for Market Earnings Ratio is defined as PR = PE / ROE / 100, where a PR of 1 indicates a reasonable valuation, greater than 1 indicates overvaluation, and less than 1 indicates undervaluation [1][3]. - Historical context is provided, referencing Warren Buffett's investment strategy, where he purchased Coca-Cola at a Market Earnings Ratio of approximately 0.4, illustrating the concept of buying undervalued stocks [1][3]. Group 2: Tencent's Financial Performance - Tencent's "non-IFRS" profit, which is considered a more accurate reflection of the company's true earnings, is recovering steadily, contrasting with its "regular" profit [4][5]. - The non-IFRS profit for Tencent is calculated by adjusting the IFRS profit to account for stock option expenses, investment gains/losses, and other non-recurring items, providing a clearer picture of profitability [4][5]. - For the fiscal year 2024, Tencent's IFRS earnings per share (EPS) is reported at 20.938 CNY, while the non-IFRS EPS is 24.027 CNY, indicating that the non-IFRS profit is 1.1475 times the IFRS profit [5]. Group 3: Valuation Insights - As of the latest data, Tencent's PE ratio stands at 22.79, which translates to a non-IFRS PE ratio of 19.86 when adjusted [5]. - The ROE based on IFRS is reported at 21.78%, which adjusts to 24.99% when calculated using the non-IFRS figures [5]. - The calculated non-IFRS Market Earnings Ratio is approximately 0.7947, indicating a valuation close to 80% of the reasonable valuation threshold [6].

Core Viewpoint - The article introduces a valuation parameter called "Market Earnings Ratio" (市赚率), defined as the ratio of Price-to-Earnings (PE) to Return on Equity (ROE), suggesting that a Market Earnings Ratio of 1 indicates a reasonable valuation, while values above or below indicate overvaluation or undervaluation respectively [2]. Group 1: Market Earnings Ratio - The formula for Market Earnings Ratio is PR = PE / ROE / 100, where a PR of 1 indicates a fair valuation [2]. - Historical examples from Buffett's investment in Coca-Cola show that the Market Earnings Ratio can guide investment decisions, with values of 0.474 and 0.326 observed in 1988 and 1989 respectively [2]. Group 2: Investment Returns and ROE - The article discusses the relationship between ROE and investment returns, stating that over a long period, ROE can approximate investment compounding, but this is a special case [4]. - It presents three hypothetical companies (A, B, C) with the same ROE but different dividend payout ratios, illustrating how dividend policies affect investment returns [4][5]. Group 3: High ROE and Low Growth - High ROE companies may not deserve high PE valuations if their growth rates are extremely low, as demonstrated through examples of companies D, E, and F with varying ROE and dividend policies [6][7]. - The article emphasizes that a 66.67% dividend payout ratio is a critical threshold where high ROE companies may start to underperform compared to low ROE companies [7][8]. Group 4: Coca-Cola Case Study - The investment in Coca-Cola from 1988 to 1998 yielded a tenfold return, with a net profit increase from 1.04 billion to 3.53 billion, showcasing that the growth rate was close to one-third of the average ROE during that period [10]. - The article suggests that the Market Earnings Ratio's requirement for net profit growth should ideally reach one-third of ROE for reasonable valuations [10]. Group 5: Industry Comparisons - The article compares the valuations of Midea and Gree, indicating that Midea's higher growth rate justifies its higher valuation, while Gree's lower growth leads to a lower valuation [10]. - It also discusses the future outlook for high-end liquor companies like Kweichow Moutai, suggesting that their profit growth may fall below one-third of ROE, which could be a concern for long-term investors [11].

Core Viewpoint - The article discusses the recent performance of Hong Kong stocks, particularly the technology sector and the low-volatility dividend ETFs, highlighting investment strategies and valuation metrics like the "Market Earnings Ratio" [2][8]. Group 1: Market Performance - The Hong Kong technology sector has seen significant gains, with the Hong Kong Technology 50 ETF rising over 50% since mid-January [2]. - The low-volatility dividend ETF (520550) has also started to experience a rebound, indicating a broader bull market in Hong Kong stocks [8]. Group 2: Investment Strategies - Investors are advised to adopt a strategy of selling as prices rise and to maintain cash positions for potential reinvestment in low-volatility dividend ETFs [2][8]. - The concept of "ten-year dollar-cost averaging" is emphasized, suggesting that investors should remain disciplined and not become emotionally attached to stocks [9]. Group 3: Valuation Metrics - The author introduces a self-invented valuation metric called "Market Earnings Ratio" (PR), calculated as PE/ROE/100, where a PR of 1 indicates fair valuation [3]. - For the low-volatility dividend ETF (520550), the current Market Earnings Ratio is approximately 0.725, suggesting it is undervalued at around 70% of its fair value [5][10]. Group 4: Dividend Yield and Economic Context - As of January 2025, the dividend yield for the low-volatility dividend ETF (520550) is 7.96%, significantly higher than the 10-year government bond yield of 1.62%, making it an attractive investment during a rate-cutting cycle [10]. - The article argues against the misconception that dividend yields must reach risk-free rates to be considered overvalued, emphasizing the importance of maintaining a focus on valuation metrics [10].