Possible Tencent Plan To Divest 17% Share of Meituan; FVEs Unchanged for Both Companies

On Aug. 16, Reuters reported, citing unnamed sources, that Tencent is planning to divest its 17% equity share in Meituan. Based on Meituan’s market cap as of the Aug. 16 close, Tencent’s stake would be worth HKD 176.8 billion. Meituan’s stock fell 9% and Tencent shares rose 1% on the day the news broke. Our fair value estimates for both companies are unchanged as Meituan is now exactly at our fair value while Tencent remains undervalued. Aside from the headline event, this is not an event that is expected to change the intrinsic value of a business nor its future cash flows.