Avior Capital Markets - Tencent Holdings Ltd. (00700) Tencent | Loading...

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Avior Capital Markets

Charl Wolmarans ...

Kevin Mattison

Tencent | Loading...

Tencent delivered its slowest topline revenue growth since listing in Jun '04. However, cost control post Tencent's strategic restructuring accelerated growth in diluted non-GAAP EPS to +14.2% y/y (Q4 '18: +12.7% y/y). We expect revenue growth (+24% y/y) and earnings growth (+27% y/y) to accelerate in Q2 '19 as gaming starts to contribute again.

Tencent's gaming revenues were depressed in Q2 '18 through to Q1 '19 due to the Chinese regulator implementing a commercial gaming approval freeze from Mar '18 to Dec '18. The low base effect together with the launch of Peacekeeper Elite, a substitute for PUBG Mobile, should contribute to a rise in Tencent's gaming revenue growth (+19% y/y; Q4 '18: +9% y/y) for the rest of FY '19. The gaming growth will provide short-term growth for Tencent and improve certainty to Tencent's outlook. Tencent management spoke with more conviction about the gaming outlook, which could include more expansion of Chinese games into global markets.

20/05/2019 13 EN

Underlying

Tencent Holdings Ltd.

Tencent Holdings Limited is an investment holding company principally involved in the provision of value-added services (VAS) and online advertising services. The Company operates through three main segments. The VAS segment is mainly involved in provision of online/mobile games, community value-added services and applications across various Internet and mobile platforms. The Online Advertising segment is mainly engaged in display based and performance based advertisements. The Others segment is mainly involved in provision of payment related services, cloud services and other services.

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KYG875721634 Hong Kong Stock Exchange Cayman Islands

Provider

Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

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Analysts

Charl Wolmarans

Kevin Mattison

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