TENCENT(TCEHY)2025-04-14 06:58Summary of Tencent Holdings Conference Call Company Overview - Company: Tencent Holdings (700 HK) - Sector: Internet Software & Services - Market Cap: HKD 4,060,528 million (USD 523,190 million) [14][10] Key Points and Arguments Industry and Market Context - Tariff Impact: Tencent has immaterial direct revenue exposure to US tariffs, indicating limited financial impact from trade tensions [2][10] - Consumer Recovery: Potential uncertainty regarding consumer recovery in China may affect payment and advertising businesses, but ongoing adtech enhancements are expected to buffer this impact [2][3] Financial Performance and Projections - 1Q25 Expectations: Revenue and non-IFRS operating profit are expected to grow by 11% and 13% year-on-year, respectively. Domestic and international games revenue is projected to grow by 19% and 18% year-on-year [4][10] - Game Performance: Domestic titles showed growth in Daily Active Users (DAU) during Chinese New Year. CrossFire Mobile and Peacekeeper Elite reported strong year-on-year gross billings growth in 1Q25 [2][3] - Buyback Commitment: Tencent's commitment to a HKD 80 billion buyback in 2025 is expected to provide valuation support alongside strong free cash flow generation capabilities [2][3] Investor Sentiment and Feedback - Quality Preference: Investors are increasingly seeking quality investments amid volatile market conditions, with Tencent being a top choice due to its defensive game portfolio and buyback commitment [3][10] - Yuanbao DAU: While the DAU growth for Yuanbao has slowed, improvements in retention rates are encouraging. The company plans to enhance features to engage users further [3][20] Financial Metrics and Ratios - Earnings Projections: EPS is projected to grow from CNY 23.67 in 2024 to CNY 36.96 in 2027, with a PE ratio decreasing from 17.7x to 11.3x over the same period [6][12] - Dividend Yield: Expected to increase from 1.0% in 2024 to 1.5% in 2027 [6][12] - Free Cash Flow: Projected free cash flow equity is expected to grow from CNY 162,676 million in 2025 to CNY 212,421 million in 2027 [11][12] Valuation and Target Price - Target Price: Maintain Buy rating with a target price of HKD 630, indicating a potential upside of 42.8% from the current share price of HKD 441.20 [4][14] Additional Important Insights - Game Pipeline: Upcoming titles such as Delta Force (mobile release on April 22, 2025) and Goddess of Victory (China release in 2Q25) are expected to contribute positively to future growth [3][10] - Market Share: Tencent's domestic mobile games market share fluctuated but remained strong, with a notable 54% share in January 2025 [32][10] This summary encapsulates the key insights from the conference call, highlighting Tencent's resilience in the gaming sector, financial projections, and strategic initiatives amidst market uncertainties.