Tencent: A Resilient Buy Amid Uncertainty
$TENCENT(00700)$
In H1 2024, Tencent’s revenue grew 8% YoY to RMB 320.6 billion, with net profit surging 72% YoY to RMB 89.5 billion. Gross margins improved to 53%, reflecting operational efficiency and a focus on high-margin businesses like gaming and advertising.
Tencent’s diversified revenue streams provide stability during geopolitical uncertainties. International gaming revenue grew 14% YoY in FY2023, while fintech and business services contributed 33% of total revenue, showcasing strong growth in domestic and non-cyclical sectors.
With a forward P/E of ~15.1x, well below its historical average of 22x-28x, Tencent is significantly undervalued. The company also boasts RMB 185 billion in cash reserves, a debt-to-assets ratio of 42%, and proactive shareholder returns through dividend hikes and share buybacks.
While geopolitical risks persist, Tencent’s proven market leadership, financial resilience, and innovation provide a strong foundation for long-term growth. At this valuation, Tencent is a rare opportunity for investors seeking value amid uncertainty.
Modify on 2025-01-12 14:04
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