Morningstar

Tencent Holdings Ltd ADR TCEHY

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Stock PINX Rating as of
$59.66 −1.00 (1.65%)
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As of Delayed Price Open

Company Report

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Tencent: Leveraging AI for Internal Growth

Ivan Su

We recently attended the Tencent Global Digital Ecosystem Summit in Shenzhen. Although the event did not disclose significant financial numbers, it did showcase Tencent's qualitative advancements in cloud and artificial intelligence. Our key takeaway is that Tencent's near-term AI monetization opportunities lie in bolstering the growth and efficiency of its internal operations rather than immediate external sales. While the summit doesn't move our HKD 704 fair value estimate, it does reinforce our view that Tencent will continue to lead in the field of AI in China.

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Price vs Fair Value

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TCEHY is trading at a 33% premium.
Price
$60.66
Fair Value
$24.00
Uncertainty
High
1-Star Price
$367.50
5-Star Price
$22.00
Economic Moat
Rkcm
Capital Allocation
Wmgxqfxqhk

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

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Trading Information

Previous Close Price
$60.66
Day Range
$58.92–60.05
52-Week Range
$33.00–60.73
Bid/Ask
$59.66 / $59.67
Market Cap
$548.22 Bil
Volume/Avg
2.5 Mil / 2.4 Mil

Key Statistics

Price/Earnings (Normalized)
20.98
Price/Sales
6.60
Dividend Yield (Trailing)
0.72%
Dividend Yield (Forward)
0.72%
Total Yield
2.63%

Company Profile

Tencent holds a prominent position in China's internet sector, with a diverse portfolio of products and services used daily by a significant portion of the population. The company is the world's largest video game publisher and owns Honor of Kings, a top-grossing mobile game globally. Tencent also operates WeChat, China's largest social media super app, which has become deeply integrated into the daily lives of Chinese people for communication, entertainment, shopping, and more. Beyond its offerings, Tencent is a significant player in global venture capital and investment. The company holds substantial stakes in leading tech companies, including PDD, Kuaishou, and Epic Games.
Sector
Communication Services
Industry
Internet Content & Information
Stock Style Box
Large Growth
Total Number of Employees
105,506
Website
http://www.tencent.com

Competitors

Valuation

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Metric
TCEHY
00302
BIDU
Price/Earnings (Normalized)
 20.9854.729.96
Price/Book Value
 4.720.451.16
Price/Sales
 6.601.072.17
Price/Cash Flow
 17.8111.028.42
Price/Earnings
TCEHY
00302
BIDU

Financial Strength

Metric
TCEHY
00302
BIDU
Quick Ratio
 1.171.222.02
Current Ratio
 1.351.672.32
Interest Coverage
 16.38−12.436.19
Quick Ratio
TCEHY
00302
BIDU

Profitability

Metric
TCEHY
00302
BIDU
Return on Assets (Normalized)
 12.28%−3.98%5.18%
Return on Equity (Normalized)
 23.79%−4.93%8.71%
Return on Invested Capital (Normalized)
 15.34%−4.27%4.81%
Return on Assets
TCEHY
00302
BIDU

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