Tencent: Ecosystem Summit Reinforces Network Effect and Long-Term Opportunities; Shares Attractive

We left Tencent's Digital Ecosystem Summit with greater confidence in our above-consensus forecasts and positive thesis on the internet giant. Through showcasing the latest cloud offerings, the two-day event accomplished three goals: 1) reinforcing the network effect underpinning our wide-moat rating through crossing the 400-million-user milestone for Tencent Meeting; 2) alleviating concerns about Tencent's ability to capture opportunities in artificial intelligence, or AI; and 3) shedding light on the monetization potential of its array of enterprise solutions. While the event doesn't move our HKD 704 (USD 90) fair value estimate, it reinforces our view that Tencent is one of the most attractively priced names in our internet coverage. The company remains undervalued, trading at a significant discount of 55% to our fair value estimate.