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Tencent Holdings Ltd ADR TCEHY

Morningstar Rating
$48.30 −0.45 (0.92%)
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Company Report

Tencent Earnings: Clear Path to Margin Expansion

Tencent’s latest first-quarter earnings validate our thesis that its monetization avenues are far from being maxed out. Although WeChat might seem to be a mature network, already having 1.3 billion users across China, there remains plenty of room to increase monetization by introducing new products and services. While the number of users may not rise significantly, usage and monetization still have a very long runway ahead, as evidenced by the strong growth in Video Accounts and Weixin search revenue during the quarter. Although Tencent does not currently dominate the short video or search engine segments, the inherent benefits of its services—such as the seamless integration of content sharing within its expansive social network—set the stage for potential future market leadership.

Price vs Fair Value

TCEHY is trading within a range we consider fairly valued.
Price
$48.30
Fair Value
$43.00
Uncertainty
High
1-Star Price
$232.50
5-Star Price
$56.00
Economic Moat
Pjrq
Capital Allocation
Gxcgzdvz

Bulls Say, Bears Say

Bulls

Many of Tencent's products are still in the early stages of monetization.

Bears

Chinese regulators have become more assertive. There is always the possibility that the government may want more control over internet businesses by curbing monetization, limiting collection of user data, or restricting acquisitions.

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News

Trading Information

Previous Close Price
$48.75
Day Range
$48.2049.22
52-Week Range
$33.0052.10
Bid/Ask
$48.07 / $48.40
Market Cap
$454.56 Bil
Volume/Avg
2.9 Mil / 2.7 Mil

Key Statistics

Price/Earnings (Normalized)
21.24
Price/Sales
5.39
Dividend Yield (Trailing)
0.90%
Dividend Yield (Forward)
0.90%
Total Yield
2.24%

Company Profile

Tencent is arguably the most influential internet firm in China, as one can hardly go a day without using its products. Tencent is the world's largest video game vendor and owns the world's top-grossing mobile game—Honor of Kings. Tencent also runs China's largest social media super app—WeChat. The app is now part of the fabric of life for Chinese people who use it to chat, shop, watch videos, play games, order food and taxis, and more. Equally as impressive as its own portfolio, Tencent is also among the world's largest venture capital and investment corporations. The firm is now one of the largest shareholders in leading tech companies like Meituan, JD, DiDi, Snap, PDD, Kuaishou, Epic Games, and more.
Sector
Communication Services
Industry
Internet Content & Information
Stock Style Box
Large Core
Total Number of Employees
105,417

Competitors

Valuation

Metric
TCEHY
BABA
BIDU
Price/Earnings (Normalized)
21.249.308.56
Price/Book Value
3.991.421.02
Price/Sales
5.391.561.86
Price/Cash Flow
17.177.496.95
Price/Earnings
TCEHY
BABA
BIDU

Financial Strength

Metric
TCEHY
BABA
BIDU
Quick Ratio
1.301.712.47
Current Ratio
1.471.802.79
Interest Coverage
13.4193.024.83
Quick Ratio
TCEHY
BABA
BIDU

Profitability

Metric
TCEHY
BABA
BIDU
Return on Assets (Normalized)
10.08%4.42%4.44%
Return on Equity (Normalized)
20.37%7.83%7.55%
Return on Invested Capital (Normalized)
12.97%7.04%3.95%
Return on Assets
TCEHY
BABA
BIDU
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Internet Content & Information Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
GOOGL
Alphabet Inc Class APmvrvgjhjNqf$2.2 Tril
GOOG
Alphabet Inc Class CVmyjnlfjFwlmr$2.2 Tril
META
Meta Platforms Inc Class APplrgyzmgzNvznv$1.2 Tril
SPOT
Spotify Technology SAVryvrlvQvvh$61.1 Bil
DASH
DoorDash Inc Ordinary Shares - Class AYydspckrGcxmf$45.1 Bil
BIDU
Baidu Inc ADRSvfxschPjk$36.2 Bil
PINS
Pinterest Inc Class AZsczmkvxrGlkxzrb$28.3 Bil
SNAP
Snap Inc Class AZrysnlrxZhnl$25.6 Bil
TME
Tencent Music Entertainment Group ADRGcftkjjbrVdngmf$25.0 Bil

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