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].