Seeking Alpha

Tencent Holding Ltd. ADR (TCEHY)

- OTCPK - Current
  • Mon, Aug. 24, 9:22 AM
    • The Shanghai and Shenzhen exchanges nosedived again overnight as fears of an economic slowdown triggered panic selling, and U.S. futures are off sharply premarket. As one would expect, many U.S.-traded Chinese names are seeing big losses.
    • Baidu (NASDAQ:BIDU) -9.8% premarket. SINA -9.7%. Weibo (NASDAQ:WB) -10.5%. Ctrip (NASDAQ:CTRP) -9.4%. Qunar (NASDAQ:QUNR) -15%. SouFun (NYSE:SFUN) -15.4%. NQ Mobile -10.1%. Qihoo (NYSE:QIHU) -14.7%. YY -9.3%. Bitauto (NYSE:BITA) -8.8%. (NASDAQ:JD) -9.6%. Vipshop (NYSE:VIPS) -15.9%.
    • Alibaba (previous) is down 9.8% to $61.48, making new post-IPO lows along the way. Tencent (OTCPK:TCEHY) fell a relatively modest 5% overnight in Hong Kong.
    | Mon, Aug. 24, 9:22 AM | 12 Comments
  • 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
  • Tue, Jun. 30, 9:04 AM
    • Cheetah Mobile (NYSE:CMCM) has amended its alliance with Chinese gaming/messaging giant Tencent (OTCPK:TCEHY) to increase the annual cap for payments made by Tencent for promotional services provided by Cheetah (via its apps) to RMB250M ($40.3M) from RMB105M ($16.9M). The alliance was originally formed in late 2013.
    • Tencent paid Cheetah RMB64.3M over the first 4 months of the year. Cheetah's rapid growth - its mobile monthly active users reached 443.6M in Q1, +12% Q/Q - has increased its potential value to Tencent as a promotional/distribution platform.
    • Cheetah has risen to $29.50 premarket. The company joined other Chinese tech names in selling off hard yesterday.
    | Tue, Jun. 30, 9:04 AM | 1 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
  • Fri, Apr. 17, 9:46 AM
    • (WUBA +5.2%) is buying a 43.2% stake in Chinese online classifieds rival for 34M shares (current value of $2.4B) and $412.2M in cash.
    • The companies will "continue to operate their respective brands, websites and teams," while exploring ways to partner and "maximize business synergies." Following the deal, Ganji stands to own a 25% stake in
    • Messaging/gaming giant Tencent (OTCPK:TCEHY), which bought a 19.9% stake in last June, is investing another $400M in the company at a price of $52/share (27% below current levels). Tencent will own a 25.1% stake once the investment closes.
    • The FT reported on Tuesday and were planning a full-blown merger, while adding (without providing details) the transaction would occur in two stages to appease regulators.
    • After opening lower, has quickly shot higher. Shares are up 39% since the FT's report arrived.
    • Yesterday: Morgan Stanley sees major 58/Ganji synergies
    • Update (12:10PM): is now down 1.6% amid a broader market selloff.
    • Update 2 (3:00PM): Shares have reversed course again. They're now up 3.9%.
    | Fri, Apr. 17, 9:46 AM | Comment!
  • Tue, Apr. 14, 7:04 AM
    • After hitting a $200B market cap yesterday, Tencent (OTCPK:TCEHY) slumped for the first time in 10 days today as billionaire Chairman Ma Huateng decreased his stake in the tech firm.
    • According to filings, Ma cut his holdings to 9.65% from 9.86%, raising a combined HK$3.2B ($415M).
    • The stock fell 5.5% in Hong Kong, its most in almost a year, leading the benchmark Hang Seng index down 1.6%.
    | Tue, Apr. 14, 7:04 AM | 3 Comments
  • Mon, Apr. 13, 10:27 AM
    • Following a 5.7% gain overnight in Hong Kong, Tencent (OTCPK:TCEHY) is worth over $200B for the first time in its history. The messaging/gaming giant's current $206.5B market cap trails only Alibaba's ($212.2B) among Chinese tech companies, and is sixth among tech firms worldwide (behind Apple, Google, Microsoft, Facebook, and Alibaba).
    • Tencent now trades for 16x 2014 sales and 53x 2014 earnings. Its gains come as many U.S.-traded Chinese peers trade far below their early-2014 highs.
    • Last month: Tencent's Q4 revenue up 24% Y/Y; WeChat MAUs top 500M
    | Mon, Apr. 13, 10:27 AM | 3 Comments
  • Wed, Apr. 8, 10:58 AM
    • Following a big overnight rally in Hong Kong (followed a 3-day holiday during which Shanghai rallied), beaten-down Chinese Internet and mobile stocks have soared in U.S. trading.
    • The biggest gainers include many names that are far below their 2014 highs: The group includes Qihoo (QIHU +10.5%), YY (YY +14.9%), Taomee (TAOM +14.3%), Sina (SINA +8.7%), and Weibo (WB +12.1%). Mobile game publishers Sky-mobi (MOBI +12.6%), China Mobile Games (CMGE +8%), and iDreamSky (DSKY +13.4%) are also sharply higher, as are online real estate plays SouFun (SFUN +13.1%), E-House (EJ +6.1%), and Leju (LEJU +9.8%).
    • Giants Alibaba (BABA +3.4%) and Baidu (BIDU +4.1%) aren't being left out. Neither are Youku (YOKU +7.5%), 21Vianet (VNET +7.4%), Momo (MOMO +6.8%), Sohu (SOHU +7.7%), Changyou (CYOU +4.5%), Dangdang (DANG +7.3%), Vipshop (VIPS +4.8%), (JD +3.9%), Jumei (JMEI +6.6%), Sungy Mobile (GOMO +5.8%), China Techfaith (CNTF +7.1%), and KongZhong (KZ +5.5%).
    • Alibaba has proposed an asset injection into its money-losing Alibaba Pictures (+36% in Hong Kong) film arm. Sky-mobi has seen Rosenblatt (Buy) hike its target to $11, while noting many Chinese mobile game developers have been bought out; it thinks Sky-mobi's investments in developers could be worth $140M. NetEase has been upgraded by CICC Research.
    • Over in Hong Kong, software/cloud services provider Kingsoft (OTCPK:KSFTF) rose 24.2% to HKD$29.50. Messaging/gaming giant Tencent (OTCPK:TCEHY) rose 3.3% to HKD$154.80.
    | Wed, Apr. 8, 10:58 AM | 134 Comments
  • Fri, Mar. 20, 12:20 PM
    • #3 Chinese search engine Sogou is planning an IPO that will feature a $3B+ valuation, Bloomberg reports. Sources add Sogou, which is controlled by Sohu (SOHU +3.7%), could see an offering in 2H15.
    • Sogou has been easily outgrowing Sohu's portal and gaming ops: Its revenue rose 70% Y/Y in Q4 to $119M. It had an estimated 6.9% Q4 Chinese search share, trailing Baidu's (NASDAQ:BIDU) 74.4% and Qihoo's (NYSE:QIHU) 17.3%.
    • Tencent (OTCPK:TCEHY) bought a 40.9% stake in Sogou in 2013 for $516M, and has integrated Sogou's services with its wildly popular WeChat mobile messaging platform (recently hit 500M MAUs). Aside from search, Sogou's services include a Web directory, games, and popular Chinese-language typing software (Sogou Pinyin).
    | Fri, Mar. 20, 12:20 PM | 7 Comments
  • Wed, Jan. 21, 2:55 PM
    • Alibaba (BABA +3.5%) and Baidu (BIDU +3.6%) have posted big gains in U.S. trading after the Shanghai Composite rose 4.7% overnight (its biggest gain in 5 years). China's other Internet giant, Tencent (OTCPK:TCEHY), hasn't been left out of the fun: Its shares rose 3.8% overnight in Hong Kong, leaving the company sporting a $155B market cap.
    • Baidu recently received positive pre-earnings commentary from Deutsche, which argued mobile monetization is improving rapidly. The firm observed Baidu hiked the minimum bid price for mobile keywords as a % of PC keyword prices to 30% from 10%, and suggested Baidu's alliance with fast-growing Android OEM Xiaomi could provide a boost. Mobile accounted for 36% of Baidu's Q3 revenue, and a majority of its traffic.
    • Alibaba, which also rallied yesterday, is eight days away from posting its FQ3 report. The consensus is for 47% Y/Y revenue growth, but only 24% EBITDA growth, as investments in new businesses and mobile marketing pressure margins.
    | Wed, Jan. 21, 2:55 PM | 9 Comments
  • Fri, Jan. 9, 10:03 AM
    • Chinese mobile messaging/gaming giant Tencent (OTCPK:TCEHY) and leading direct online retailer (JD +0.8%) are directly investing $1.3B in "cash and resources" in major auto site Bitauto (BITA +8.7%), and $250M in Bitauto's YiXin Capital (online auto financing) subsidiary.
    • JD will directly invest $400M in cash in Bitauto and provide $750M in resources, including "exclusive access to the new and used car channels on's e-commerce sites including mobile apps and additional support from its key platforms," in exchange for shares. Tencent will directly invest $150M in cash. JD and Tencent will respectively invest $100M and $150M in YiXin Capital.
    • The deal will leave JD with a 25% stake in Bitauto, and Tencent a 3.3% stake. JD and Tencent will respectively have 17.7% and 26.6% stakes in YiXin Capital. Tencent already has a sizable stake in JD.
    • Bitauto, whose shares have soared on the news, promises to "aggressively invest to solidify Bitauto's industry leadership and build market share" in upcoming months. Rival Autohome (ATHM +5.8%) is also up sharply, perhaps on hopes a Tencent/JD rival (Alibaba?) will invest in the company in response.
    | Fri, Jan. 9, 10:03 AM | 2 Comments
  • Dec. 3, 2014, 11:05 AM
    • After previously filing to sell 21.8M shares on behalf of existing holders at a maximum offering price of $22.72, (NASDAQ:JD) is selling 26M shares for them at a price of $23.80.
    • China's second-biggest e-commerce firm also states Tencent (OTCPK:TCEHY), which took a 15% stake in JD and formed an alliance with the company prior to its IPO, has bought another $150M worth of shares through the offering. Hedge fund Tiger Global, another major JD investor, has purchased an additional $47.6M worth of shares.
    • With a lockup expiration looming, JD's six biggest shareholders, which include Tencent, Tiger, and chairman/CEO Qiangdong Liu, have agreed not to sell shares "for a period of 90 days after the offering."
    • Shares +14% over the last two days.
    | Dec. 3, 2014, 11:05 AM | Comment!
  • 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!
  • Jun. 27, 2014, 9:57 AM
    • Chinese messaging/gaming giant Tencent (TCEHY) is paying $736M to buy a 19.9% stake in local online classifieds leader (WUBA -1.4%).
    • Tencent is paying the equivalent of $40/share for its stake - 23% below's current trading levels. will use some of the proceeds to buy back 27.6M shares ordinary shares (the equivalent of 13.8M ADS) from pre-IPO holders.
    •'s services will be integrated with Tencent's QQ and Weixin (WeChat) messaging platforms, which are nearly ubiquitous in China. Both companies have also "agreed to use each other as [their] preferred partner in local services."
    • The investment is the latest in a string of major deals by Tencent meant to solidify its Web/mobile empire as it battles with Alibaba and Baidu on a variety of fronts. The latter two companies haven't been standing idly either.
    • It looks like some investors knew in advance:'s shares rose 13.8% yesterday ahead of the announcement.
    | Jun. 27, 2014, 9:57 AM | 4 Comments
  • 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!
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