Mon, May 18, 3:10 PM
- Bloomberg reports Baidu (BIDU -0.8%) is teaming with top ride-sharing platform Uber and P-E firm Apax Partners to jointly bid for Nokia's (NOK +0.7%) HERE mapping/navigation software unit. Sources state the business could fetch as much as $4B.
- A rival group consisting of Chinese messaging/gaming giant Tencent (OTCPK:TCEHY), Chinese mapping firm/Tencent partner NavInfo, and Swedish P-E firm EQT Partners is also reportedly bidding. A group of German automakers (mentioned in past reports) and a trio of P-E firms are reportedly interested as well, and Microsoft (NASDAQ:MSFT) has offered to buy a minority stake.
- The next round of bids are reportedly due in 2 weeks. Baidu is said to be partnering with Uber to "avoid regulatory scrutiny." The NYT previously reported Uber has bid up to $3B for HERE, which has a dominant position in the in-car automotive market.
- Separately, Baidu has announced a "strategic investment" in content recommendation platform Taboola - readers may be familiar with the "Recommend for you" article boxes Taboola provides at the bottom of articles on partner sites. The WSJ reports Baidu, which plans to bring Taboola's platform to China, invested $20M-$30M.
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 JD.com.
- 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, 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.
Tue, Apr. 28, 3:41 AM
- Taking on domestic rivals in the smart hardware space, Tencent (OTCPK:TCEHY) has launched an operating system for internet-connected devices such as TVs and watches that will be open to all developers.
- Tencent Operating System and TOS+ mirrors Google's Android mobile OS, and will allow manufacturers and developers to freely use the platform if they agree to share revenue.
Fri, Apr. 17, 9:46 AM
- 58.com (WUBA +5.2%) is buying a 43.2% stake in Chinese online classifieds rival Ganji.com 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 58.com.
- Messaging/gaming giant Tencent (OTCPK:TCEHY), which bought a 19.9% stake in 58.com 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 58.com and Ganji.com were planning a full-blown merger, while adding (without providing details) the transaction would occur in two stages to appease regulators.
- After opening lower, 58.com 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): 58.com 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%.
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%.
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
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.com (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.
- ETFs: KWEB, CQQQ, QQQC
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).
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 JD.com 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.”
Mon, Feb. 16, 5:17 PM
- Ford (NYSE:F) confirms it's in talks with Tencent (OTCPK:TCEHY) over adding hands-free apps to models in China.
- A partnership which includes Tencent's popular WeChat app (+375M domestic active users) could have high strategic value for the automaker.
- Last summer, GM joint venture Shanghai OnStar launched a limited platform with Tencent.
Mon, Feb. 16, 12:41 PM
- Select Chinese automobile industry stocks rose today in reaction to Friday's reports on Apple's interest in the electric vehicle market.
- BYD Group (BRK.A, BRK.B) was up 11% in Hong Kong trading off speculation the company could partner with Apple on an EV project.
- NavInfo rose 10% in Shenzhen with the company viewed as ripe to see an investment from Apple. Tencent (OTCPK:TCEHY) has a double-digit stake in NavInfo.
- Shares of parts maker Ningbo Joyson Electronics were up 10% in Shanghai. Ningo is becoming a bigger player in the Chinese automobile industry through acquisitions.
- Kandi Technologies (NASDAQ:KNDI) is also a stock to watch to see if the Apple sphere of influence touches it.
- Previously: WSJ: Apple car project is for real, and it's a minivan (Feb. 13 2015)
- Previously: Apple aftershocks: Maybe it's Toyota that should be worried? (Feb. 14 2015)
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.
Fri, Jan. 9, 10:03 AM
- Chinese mobile messaging/gaming giant Tencent (OTCPK:TCEHY) and leading direct online retailer JD.com (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 JD.com'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.
Dec. 16, 2014, 5:01 AM
- Tencent (OTCPK:TCEHY) has struck the latest in a string of music distribution deals, this time with Sony Music Entertainment (NYSE:SNE), as it teams up with labels to try to develop China's paid-for music market.
- In November, the company signed a similar music distribution partnership with Warner Music Group.
- Tencent is also investing heavily in content for its online video site, with a China streaming deal with U.S. network HBO and video subscription service through Disney.
Dec. 10, 2014, 1:35 PM
- After announcing the creation of the Emerging Markets ex-State-Owned Enterprises Index yesterday, WisdomTree rolled out the the WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (NYSEARCA:XSOE) this morning.
- According to WisdomTree's blog post for the launch, XSOE "provides investors with a way to capitalize on the opportunities of emerging markets without the politics involved with state-owned enterprises."
- Top holdings in the fund include Tencent Holdings (OTCPK:TCEHY), Samsung Electronics (OTC:SSNHY) and Baidu (NASDAQ:BIDU); two companies out of China and one from South Korea.
- Other emerging market ETFs: EEM, VWO, EDC, EDZ, SCHE, IEMG, EEV, ADRE, EET, EUM, GMM, EEME, DBEM, EMCR, FEM, EWEM, EMLB, HEEM, EMSA, EMFT
TCEHY vs. ETF Alternatives
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