China is blowing up a storm of anti-monopoly and strong supervision. In this context, "stock king" Tencent (0700) will announce its second-quarter results on Wednesday (18th).
According to market estimates, Tencent’s quarterly revenue was approximately RMB 139 billion, an increase of approximately 20% year-on-year; net profit was RMB 34.2 billion, an increase of approximately 13% year-on-year; non-IFRS net profit was approximately RMB 33 billion , Up 11% year-on-year.
So far this year, Tencent’s stock price has fallen 29.7%, reflecting unfavorable factors such as online game regulation. The current valuation has fallen to the lowest level since the Sino-US trade war.
Some experts believe that even if the online game regulation has been tightened and the share price has fallen, Tencent’s performance growth has been maintained, which can bring a lot of support to the valuation, 450 Hong Kong dollars still has investment value, and there is room for profit in the medium term.
According to Bloomberg’s comprehensive estimates, Tencent’s median revenue for the second quarter is 139.5 billion yuan, up 21% year-on-year.
(China News Service)
Revenue is expected to increase by about 20% year-on-year
According to Bloomberg’s comprehensive estimates, Tencent’s median revenue for the second quarter is 139.5 billion yuan, up 21% year-on-year and 3% quarter-to-quarter; non-IFRS net profit It was 33.4 billion yuan, an increase of 11% year-on-year and 1% quarter-to-quarter.
Regarding the ratings of major banks, a total of 67 brokerage firms are optimistic about Tencent, giving them a "buy" or "hold" investment rating. The target price ranges from HK$2490 to HK$860, which are all higher than the current stock price.
Among the brokerage firms, GF Securities has the most "bull" opinion and has a "buy" rating with a target price of HK$860, while the German Central Cooperative Bank is the weakest with a target price of only HK$490 and has a "sell" rating.
Goldman Sachs issued a report, expecting Tencent's second-quarter revenue to reach 139 billion yuan, up 21% year-on-year, and net profit is expected to rise 13% to 34.2 billion yuan.
The bank pointed out that after a sharp drop in Tencent’s stock price, it has fallen from a 52-week high by more than 40%, and the risk return has become attractive. From HK$906 to HK$759.
Guosen Securities forecasts Tencent’s revenue of RMB 138.3 billion in the second quarter, an increase of 20% year-on-year; non-IFRS net profit is RMB 32.5 billion, an increase of 8% year-on-year.
Guosen believes that the slowdown in net profit growth is mainly caused by the company’s active investment, and that net interest rates will be affected to a certain extent in the short term, rather than slowing down in revenue growth or operating issues. It also stated that the current stock price has fully reflected the market’s policy, Concerns about the slowdown in net profit growth, and investments in games going overseas, industrial Internet, and short videos can help Tencent's next phase of growth.
Wu Lixian, a strategist at Everbright Sun Hung Kai Securities, said: "Even though online game regulation has been tightened and the stock price has fallen, Tencent's performance growth has been maintained, which can bring a lot of support to the valuation." (Vision China)
Concern 1. Strong supervision of online games increases costs
The central media "Economic Information Daily" recently published an article pointing out that internet addiction among minors is widespread, and online games also have a double negative impact on minors' physical and mental health.
Tencent has the highest market share in the Chinese game industry, accounting for 54.46% of the market share.
Online games account for one-third of Tencent's total revenue and also have a high gross profit margin.
Investors are concerned about the impact of the regulatory storm on Tencent's business in this area.
Wu Lixian, a strategist at Everbright Sun Hung Kai Securities, believes that online game regulation will increase Tencent’s costs in the short term. For example, the cost of business policies will affect the company’s growth in the short term, but in the medium and long term, relevant policies will maintain the long-term and healthy development of the industry, which is relatively positive for Tencent. .
He continued to explain that based on Tencent's market share and position in the industry, in terms of industry development, it is difficult for a large technology company to threaten Tencent's position in the short term.
"Even though the regulation of online games has been tightened and the stock price has fallen, Tencent's performance growth has been maintained, which can bring a lot of support to the valuation."
Wu Lixian pointed out: "Tencent has strong resistance, and the impact of supervision will not be very violent and obvious."
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Pay attention to two, the growth rate of financial technology
In addition to the gaming business, Tencent's financial technology and business services divisions have grown rapidly. In the first quarter of this year, revenue reached 26.4 billion yuan, up 38% year-on-year, accounting for 68% of total revenue costs.
This part of the business is also affected by the regulatory turmoil. In March this year, the mainland regulators may require Tencent to establish a financial holding company to cover its banking, insurance, and payment service businesses.
Potential regulatory requirements have the opportunity to limit Tencent's WeChat payment business, loan and financial technology business expansion pace will be limited.
Wu Lixian pointed out that the impact of tightening financial technology supervision on Tencent mainly includes payment platforms and loan businesses.
Regarding the payment platform, supervision has a "certain impact" on Tencent, but considering its high market share, large number of users, and frequent use frequency, it poses little threat to future growth, even if the market is worried that Tencent will increase funds to prevent financial system risks. It will affect the growth prospects, but based on diversified development, Tencent has "strong resistance, and the impact of supervision will not be very violent and obvious."
Wu Lixian said frankly: Tencent's 450 yuan still has investment value, and there is still room for profit.
(Reuters)
Pay attention to three, other income performance
In addition, Tencent's huge investment business also ushered in a harvest period. In the financial report for the first quarter of this year, Tencent recorded a net other income of 19.5 billion yuan (RMB. The same below), an increase of 4.8 times from the previous year’s 4 billion yuan. The main source was non-IFRS adjustment items (non -IFRS).
Tencent has invested in many Chinese concept stocks, such as Meituan (3690), Kuaishou (1024), JD (09618) Shell, Weilai, etc. At the end of 2020, the financial report showed that the fair value of Tencent's investment associates reached 981.9 billion yuan. However, China's concept stocks have plummeted recently. For example, the Kuaishou high has seen 417 yuan, and it has dropped to 74 yuan recently, down about 82%. And dragged down by changes in the market value of Kuaishou, Tencent, the largest shareholder with a shareholding ratio of 21%, will also have a certain impact on this quarter's financial report.
Wu Lixian admitted that the fall in China's concept stocks will have a certain impact on Tencent's investment value, and the market expects that the impact of China's concept stocks will be reflected in the performance. However, he believes that the market's focus is on the continued growth of Tencent's business, and the second is the rise and fall of investment value.
Wu Lixian said frankly that it is difficult to judge the lowest stock price in the short term, but in the medium and long term, many large emerging economy stocks have also fallen. He believes that in the medium and long term of one to two years, Tencent's 450 yuan still has investment value and there is still room for profit.