Seeking Alpha

Tencent Holding Ltd. ADR (TCEHY)

- OTCPK - Current
  • Wed, Aug. 12, 7:03 PM
    • Tencent (OTCPK:TCEHY) had Q2 revenue of RMB23.43B (+19% Y/Y), below a consensus of RMB24.12B. Net income of RMB7.31B ($1.15B) is nearly in-line with an RMB7.32B consensus.
    • Weighing on sales growth: Online gaming revenue rose 17% Y/Y to RMB12.97B, a slowdown from Q1's 28% growth. In addition, social network revenue rose 18% to RMB5.5B, a slowdown from Q1's 32%. If Tencent had been using gross revenue recognition (doesn't back out partner payments) a year ago, gaming and social growth would've respectively been 11% and 14%.
    • On the flip side, online ad revenue rose 97% to RMB4.07B, after growing 131% in Q1 off a smaller base. Video ad growth led brand display ad sales to rise 47% to RMB2.02B; social ad sales led performance-based (cost per click) ad sales to rise 196% to RMB2.06B.
    • WeChat/Weixin monthly active users (MAUs) rose by 51M Q/Q to 600M. The QQ messaging/gaming platform saw MAUs rise by 11M Q/Q to 843M (627M on "smart devices"), and the Qzone social networking platform saw MAUs drop by 9M to 659M (574M on "smart devices"). Fee-based value-added subscriptions fell by 4% Y/Y to 84M.
    • Boosting earnings: Sales/marketing spend fell 19% Y/Y to RMB1.6B. G&A spend rose 16% to RMB4B. Going forward, Tencent plans to focus its smartphone game development efforts on titles it thinks "can create or re-define important mobile game genres."
    • Earnings Release (.pdf)
    | Wed, Aug. 12, 7:03 PM | 1 Comment
  • Mon, Aug. 3, 7:03 PM
    • Ctrip (NASDAQ:CTRP) is guiding for 45%-50% Y/Y RMB-based revenue growth. Consensus in dollars is for 43% growth.
    • The modest size of Ctrip's Q2 sales beat could be disappointing investors, after a much bigger beat was delivered in May. Hotel (accommodation) revenue rose 47% Y/Y (volume +55%) to $178M, transportation (ticket) revenue 45% to $170M (volume +106%), packaged tour revenue 61% to $53M, and corporate travel revenue 34% to $19M.
    • R&D spend rose 66% Y/Y to $128M, sales/marketing 42% to $109M, and G&A 34% to $42M. Gross margin was 71% vs. 70% in Q1 and 72% a year ago.
    • Meanwhile, in tandem with its Q2 results, smaller Chinese online travel firm eLong (NASDAQ:LONG) has announced the receipt of an $18/share offer from messaging/gaming giant Tencent (OTCPK:TCEHY) to buy all of the eLong shares not currently owned by Tencent, certain members of management, and "major shareholders" controlling at least 70% of all voting rights.
    • Tencent owns 15% of eLong. In May, Ctrip spent $400M to take a 37.6% stake in eLong.
    • CTRP -1.7% AH to $70.25. LONG +10.1% to $15.65.
    • Ctrip: Q2 results, PR. eLong: Q2 results, PR.
    | Mon, Aug. 3, 7:03 PM | 2 Comments
  • Wed, May 13, 1:11 PM
    • Tencent (OTCPK:TCEHY) had Q1 revenue of RMB22.4B ($3.65B), up 22% Y/Y and topping an RMB22.08B consensus. Net income rose 7% to RMB6.88B ($1.12B), topping an RMB6.45B consensus. Free cash flow rose 53% to RMB8.35B ($1.36B). (earnings release - .pdf)
    • WeChat/Weixin growth remained strong: Monthly active users rose 10% Q/Q and 39% Y/Y to 549M; Q/Q growth accelerated from Q4's 7%. The older QQ messaging/gaming platform had 832M MAUs (603M on smart devices), +2% Q/Q but -2% Y/Y. The Qzone social networking platform had 668M MAUs (568M on smart devices), +2% Q/Q and +4% Y/Y.
    • Driving the Q1 beat: Online ad sales rose 131% Y/Y to RMB2.72B. Brand display ad sales rose 90%, and performance-based (i.e. click-based) sales 199%. Tencent chalks up the growth to video ad sales and WeChat/Qzone click ad growth. 40% of brand ad and 75% of performance ad revenue came from mobile.
    • Online game revenue rose 28% to RMB13.31B (still 59% of revenue), and social networking revenue (subscription-driven) 32% to RMB5.31B. Mobile gaming growth continues to lift online gaming sales. "Other" revenue fell 63% to RMB1.05B thanks to the shifting of e-commerce sales to
    • Gross margin rose to 60% from 58% a year ago. Sales/marketing spend fell 29% Y/Y to RMB1.3B thanks to lower promotional activity, while G&A spend rose 25% to RMB3.7B.
    • Along with the numbers, Tencent has announced plans to ramp its efforts to monetize WeChat: The company will begin showing more ads in WeChat's Moments news feed after testing them in Q1, and is open to investing more in WeChat's mobile payments service (competes against Alibaba's Alipay).
    • Last month: Tencent's market cap tops $200B for the first time
    | Wed, May 13, 1:11 PM | Comment!
  • Wed, Apr. 29, 4:33 PM
    • Along with its Q1 results, Glu Mobile (NASDAQ:GLUU) announces Chinese gaming/messaging giant Tencent (OTCPK:TCEHY) is investing $126M in the company through the purchase of 21M shares at $6 apiece. Tencent will own 14.6% of Glu once the deal closes, and Glu will have a $190M cash balance.
    • With Tencent's WeChat mobile messaging platform (~500M MAUs) nearly ubiquitous in China and the company claiming a massive share of the Chinese online/mobile gaming market, the alliance could significantly increase the Chinese reach of Glu's games. Tencent exec Steven Ma will be joining Glu's board.
    • Also announced: Glu is partnering with Britney Spears to launch a new mobile game in 1H16. A 5-year exclusive agreement has been reached with the singer; it features a 3-year extension. The deal comes 3 months after one with Katy Perry, and follows the huge 2014 success of Kim Kardashian: Hollywood.
    • Glu now expects 2015 revenue of $262M-$287M and EPS of $0.20-$0.24 vs. a consensus of $265.6M and $0.25. Q2 guidance is for revenue of $50M-$52M and EPS of -$0.03 to -$0.05 vs. a consensus of $50.9M and -$0.02.
    • The company states its Q1 beat was "driven by the ongoing traction of Kim Kardashian: Hollywood, Racing Rivals, Deer Hunter 2014, and Contract Killer: Sniper." Its strong full-year sales guidance is attributed to an upcoming game lineup that includes "Terminator, Cooking Dash, Deer Hunter 2016, James Bond: 007 and Katy Perry."
    • Glu has surged to $6.26 AH. Q1 results, earnings release.
    | Wed, Apr. 29, 4:33 PM | 19 Comments
  • Wed, Mar. 18, 2:10 PM
    • Tencent (OTCPK:TCEHY) had Q4 revenue of RMB20.98B ($3.43B), +24% Y/Y (slightly slower than Q3's 28% growth) and beating a consensus of RMB20.5B. Net income attributable to equity holders rose 51% to RMB6.72B, beating a consensus of RMB6.26B. Free cash flow rose 72% to RMB9.18B ($1.47B).
    • WeChat monthly active users (MAUs) rose 7% Q/Q and 41% Y//Y to 500M. WhatsApp (700M+ MAUs) and Facebook Messenger (just reached 700M) are the only mobile messaging platforms with larger bases.
    • The QQ messaging/gaming platform had 815M MAUs, up 1% Y/Y but down by 5M Q/Q; 576M QQ users are now on "smart devices." The Qzone social networking platform saw MAUs rise 4% Q/Q and 5% Y/Y to 654M (540M on smart devices).
    • Tencent continues towering over China's gaming industry: Online game revenue rose 41% Y/Y to RMB12B, fueled by mobile WeChat/QQ gaming growth. Going forward, Tencent aims to "diversify and capitalize on our strong title pipeline for PC and mobile games to penetrate into new genres."
    • Social networking revenue rose 50% to RMB5.2B, aided by in-game purchases and subscription revenue growth. Online ad revenue rose 75% to RMB2.6B (video ads provided a lift), while e-commerce revenue fell 87% to RMB446M thanks to the partnership. "Other" revenue sources rose over 3x to RMB768M.
    • G&A spend rose 44% to RMB4B, while sales/marketing rose just 1% to RMB2.1B. Op. margin rose to 35% from 28%.
    • President Martin Lau argues ad monetization and low mobile gaming payment rates and  leave plenty of room for future growth. "Facebook has been able to build a very large advertising business on a social network. Advertising will be a major contributor to our revenue.”
    | Wed, Mar. 18, 2:10 PM | 3 Comments
  • Nov. 12, 2014, 3:10 PM
    • Tencent (OTCPK:TCEHY +1.3% in Hong Kong) had Q3 revenue of RMB19.8B ($3.2B), +28% Y/Y but missing a consensus of RMB20.6B. Likewise, net income totaled RMB5.7B ($924M), +46% Y/Y but below an RMB6.2B consensus. Y/Y revenue growth slowed from Q2's 37%.
    • WeChat monthly active users (MAUs) totaled 468M at the end of Q3, +7% Q/Q and +39% Y/Y. Q/Q growth slowed from Q2's 11%.
    • The older QQ messaging/gaming platform finished with 820M MAUs (542M on "smart devices"), -1% Q/Q and +1% Y/Y. The Qzone social networking platform had 629M MAUs (506M on smart devices), -2% Q/Q and +1% Y/Y.
    • Value-added service revenue rose 38% Y/Y to RMB16.1B, thanks to a 35% increase in online game revenue to RMB11.3B (57% of total revenue) and a 47% increase in social networks revenue to RMB4.7B. Online ad revenue +76% to RMB2.4B; e-commerce revenue -81% to RMB459M thanks to the partnership.
    • Gross margin rose 900 bps Y/Y to 64%, which allowed op. margin to rise 700 bps to 38%. Sales/marketing spend rose 30% to RMB1.9B, and G&A spend 44% to RMB3.8B.
    • Earnings Release (.pdf)
    | Nov. 12, 2014, 3:10 PM | Comment!
  • Aug. 13, 2014, 12:38 PM
    • Tencent (OTCPK:TCEHY) had Q2 revenue of RMB19.75B ($3.21B), +37% Y/Y and above an RMB19.2B consensus. Net income rose 59% to RMB5.84B ($948M), above an RMB5.51B consensus.
    • WeChat monthly active users (MAUs) rose 11% Q/Q and 57% Y/Y to 438M. MAUs for Tencent's older QQ messaging/gaming platform totaled 829M, -2% Q/Q and +1% Y/Y. MAUs for the Qzone social networking platform totaled 645M, flat Q/Q and +3% Y/Y.
    • 521M QQ MAUs and 497M Qzone MAUs are now respectively using "smart devices."
    • Total value-added service (VAS) revenue rose 9% Q/Q and 46% Y/Y to RMB15.7B. Within the segment, online gaming revenue rose 7% Q/Q to RMB11.1B, thanks largely to mobile growth - Tencent recently disclosed it now has 600M+ mobile gaming users. PC gaming revenue was "broadly stable." Social networking revenue rose 15% Q/Q to RMB4.6B, thanks largely to mobile.
    • Online ad revenue rose 59% Y/Y to RMB2.1B, aided by video/social ad growth. E-Commerce revenue fell 40% to RMB1.3B, thanks to the (JD +4.3%) partnership. JD shares are rallying.
    • Gross margin rose to 62% from 54% a year ago, and op. margin to 40% from 32%. Tencent cautions mobile gaming revenue could be flat in 2H14, as the company focuses on optimizing the user experience.
    | Aug. 13, 2014, 12:38 PM | Comment!
  • May 14, 2014, 2:19 PM
    • Tencent (TCEHY +8.4%) trades higher after reporting better than expected Q1 earnings, as net income soared 60% Y/Y to 6.46B and easily beating the analyst consensus estimate of 4.04B yuan.
    • Q1 revenues rose 36% Y/Y to 18.5B yuan; online gaming sales jumped 39%, contributing 56% of Tencent’s total revenue.
    • Mobile gaming revenue is beginning to make a significant contribution to revenue, with sales soaring 200% Q/Q to 1.8B and representing 17% of Tencent’s total gaming sales, up from 7% last quarter.
    • WeChat and QQ, the two messaging programs, claim 396M monthly active users, up 11.5% Q/Q, and the number of monthly active users for Tencent’s instant messaging service is 848M.
    • Numbers like these no doubt will help feed the anticipation for Alibaba’s (ABABA) upcoming IPO.
    | May 14, 2014, 2:19 PM | Comment!
  • Feb. 28, 2014, 2:16 PM
    • Over the last 48 hours, Baidu, Dangdang, Youku, and have all posted Q4 beats and provided strong Q1 guidance. The numbers are giving a lift to a slew of Chinese Internet stocks.
    • Notable gainers: SOHU +6.5%. PWRD +13.2%. VIPS +4.3%. YY +2.2%. RENN +3.8%. GOMO +5.5%.
    • In Sohu's case, the rumor mill might also be helping out. A source tells Marbridge Consulting Sohu CEO Charles Zhang and Tencent (TCEHY +1.2%) CEO Pony Ma have talked about merging their companies' online video units. Both Sohu and Tencent trail market leaders Youku and Baidu in China's burgeoning online video market.
    • Dangdang (DANG +8.6%) is adding to yesterday's big post-earnings gains after Oppenheimer hiked its PT to $15. The firm likes Dangdang's improved efficiency and partnerships with e-commerce rivals (inc. Alibaba's Tmall), and the fact mobile accounted for 13% of Q4 orders.
    | Feb. 28, 2014, 2:16 PM | 2 Comments
  • Jul. 24, 2013, 2:51 PM
    Electronic Arts (EA +8.2%) has soared to new 52-week highs following its big FQ1 beat and in-line FY14 guidance; Activision (ATVI +1.1%) and Take-Two (TTWO +1%) are up moderately. EA managed to grow its Battlefield 3 Premium sub base by 500K Q/Q to 4M+, and mobile revenue rose 33% Y/Y to $104M (21% of total) thanks to in-app purchases for The Simpsons: Tapped Out and Real Racing 3. Home console ($191M) and PC ($175M) revenue both fell 6% Y/Y. While total revenue rose 1% Y/Y, opex fell 3% thanks to recent job cuts. Also: EA has announced it's partnering with Chinese gaming giant Tencent (TCEHY.PK) to bring FIFA Online 3 to China. Wedbush is pulling EA from its Best Ideas list, arguing a lot of good news is priced in, but maintaining an Outperform. (transcript)
    | Jul. 24, 2013, 2:51 PM | Comment!
  • Mar. 20, 2013, 10:57 AM
    Solid earnings from Tencent (TCEHY.PK) and a rally in Shanghai help Chinese Internet stocks trade higher. YOKU +3.8%. SINA +2.8%. QIHU +2.5%. SOHU +1.8%. YY +1.8%. NTES +1.5%. PWRD +1.7%. Tencent, which rose 1.5% in Hong Kong, reported a 53% Y/Y increase in Q4 sales to $1.96B, and a 37% increase in net income to $557M. Ad sales were better than expected, and value-added service sales (includes online games) rose 32%. Registered accounts for Tencent's WeChat mobile IM platform, which competes with Sina's Weibo, have topped 300M.
    | Mar. 20, 2013, 10:57 AM | Comment!
  • Feb. 20, 2013, 9:27 AM
    Sina (SINA) +7.6% as praise pours in for its Q4 beat, which was highlighted by growing Weibo revenue (20% of total). Stifel predicts Weibo, which produced a 2011/2012 surge in R&D spend, will turn an operating profit in Q4. On its earnings call, Sina admitted Tencent's (TCEHY.PK) WeChat mobile messaging platform, which now has 300M registered accounts, contributed to a "slight decrease in average time spent" by Weibo users. But it insisted Weibo and its 500M+ accounts now have a "critical mass," and said it's investing heavily to increase Weibo's mobile reach.
    | Feb. 20, 2013, 9:27 AM | Comment!
Company Description
Tencent Holdings Limited provides Internet, mobile, and telecommunication value-added services in China. The Company has an instant messaging community in China. Tencent also provides online advertising services.
Sector: Technology
Country: China