Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A shares were down on the week, but rallied Thursday and Friday.</li>
<li>Net SOUTHBOUND buying was +HK8.5bn after $57bn the two weeks before. SOUTHBOUND ended its consecutive net daily buy streak Monday, then started buying again.</li>
<li>The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week. Again.</li>
</ul>


A shares were down on the week, but rallied Thursday and Friday.
Net SOUTHBOUND buying was +HK8.5bn after $57bn the two weeks before. SOUTHBOUND ended its consecutive net daily buy streak Monday, then started buying again.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week. Again.


HK Connect SOUTHBOUND Flows (To 28 Mar 2024); Strong Net Buying on Tencent, Telcos, and Energy

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>Tencent reported C4Q23 revenue, IFRS operating profit, and non-IFRS net income in-line with our estimates and in-line with consensus, with non-game revenues exceeding while game revenue missing expectations;</li>
<li>We believe the shift from game to non-game should enhance Tencent multiples but the market might have concerns on the sustainability of this change. </li>
<li>We believe this change is sustainable with game revenue reaccelerating and non-game revenue continues to gain weight. We cut TP by 3% to reflect slow game recovery in C1H24.</li>
</ul>


Tencent reported C4Q23 revenue, IFRS operating profit, and non-IFRS net income in-line with our estimates and in-line with consensus, with non-game revenues exceeding while game revenue missing expectations;
We believe the shift from game to non-game should enhance Tencent multiples but the market might have concerns on the sustainability of this change. 
We believe this change is sustainable with game revenue reaccelerating and non-game revenue continues to gain weight. We cut TP by 3% to reflect slow game recovery in C1H24.


[Tencent (700 HK, BUY, TP HK$351) TP Change]: Improvement of Earning Quality Should Be Sustainable

<ul>
<li>A shares were down small on the week. Larger caps down more. H-shares down more after a hard Friday.</li>
<li>Net SOUTHBOUND buying was +HK35.8bn after $21.4bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.</li>
<li>The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week.</li>
</ul>


A shares were down small on the week. Larger caps down more. H-shares down more after a hard Friday.
Net SOUTHBOUND buying was +HK35.8bn after $21.4bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week.


HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

<ul><li>Tencent Holdings Ltd. (腾讯) reported weaker-than-expected results in the fourth quarter of 2023, as the Chinese internet behemoth faced challenges growing its gaming business, particularly in China’s domestic market.</li><li>During the three-month period, Hong Kong-listed Tencent generated 155.2 billion yuan ($21.9 billion) in revenue, up 7% from 2022, according to its earnings report released Wednesday. That missed the average estimate of 157.4 billion yuan by analysts surveyed by Bloomberg.</li><li>Quarterly net profit also fell short of expectations, down 75% year-on-year at 27 billion yuan, compared to average analysts’ predictions of 33.3 billion yuan.</li></ul>

Tencent Holdings Ltd. (腾讯) reported weaker-than-expected results in the fourth quarter of 2023, as the Chinese internet behemoth faced challenges growing its gaming business, particularly in China’s domestic market.During the three-month period, Hong Kong-listed Tencent generated 155.2 billion yuan ($21.9 billion) in revenue, up 7% from 2022, according to its earnings report released Wednesday. That missed the average estimate of 157.4 billion yuan by analysts surveyed by Bloomberg.Quarterly net profit also fell short of expectations, down 75% year-on-year at 27 billion yuan, compared to average analysts’ predictions of 33.3 billion yuan.

Tencent Posts Weaker Quarterly Results Amid Gaming Challenges 

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Tencent announced its 4Q23 results on 20 Mar: total revenue grew by 7% YoY to RMB155.2bn in 4Q23, largely in line with our/consensus estimate of RMB156.1/157.4bn.</li><li>Non-IFRS net income was up by 44% YoY to RMB42.7bn in 4Q23, ahead of our/consensus estimate of RMB40.0/42.0bn, mainly due to solid GPM expansion (+7.3ppt YoY).</li><li>FY23 total revenue grew by 10% YoY to RMB609.0bn, and non-IFRS net income increased by 36% YoY to RMB157.7bn. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Tencent announced its 4Q23 results on 20 Mar: total revenue grew by 7% YoY to RMB155.2bn in 4Q23, largely in line with our/consensus estimate of RMB156.1/157.4bn.Non-IFRS net income was up by 44% YoY to RMB42.7bn in 4Q23, ahead of our/consensus estimate of RMB40.0/42.0bn, mainly due to solid GPM expansion (+7.3ppt YoY).FY23 total revenue grew by 10% YoY to RMB609.0bn, and non-IFRS net income increased by 36% YoY to RMB157.7bn. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tencent (700 HK) - Unleashing Business Model Advantages

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent (700 HK)

HK Connect SOUTHBOUND Flows (To 28 Mar 2024); Strong Net Buying on Tencent, Telcos, and Energy

HK SOUTHBOUND Connect was a net buyer again this week, but the streak of consecutive buying since Chinese New Year was broken on Monday. SOEs and...

Travis Lundy

[Tencent (700 HK, BUY, TP HK$351) TP Change]: Improvement of Earning Quality Should Be Sustainable

Tencent's C4Q23 results show non-game revenue exceeding expectations, but market concerns linger on sustainability of shift from game to non-game...

Blue Lotus Research Institute

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs

HUGE inflows into HK stocks by HK SOUTHBOUND Connect led by Tencent and the Tracker Fund. High-div SOEs were the main target before. Still seeing...

Travis Lundy

Tencent Posts Weaker Quarterly Results Amid Gaming Challenges

Tencent Holdings Ltd. (腾讯) reported weaker-than-expected results in the fourth quarter of 2023, as the Chinese internet behemoth faced challenges...

Caixin Global

Tencent (700 HK) - Unleashing Business Model Advantages

Tencent announced its 4Q23 results on 20 Mar: total revenue grew by 7% YoY to RMB155.2bn in 4Q23, largely in line with our/consensus estimate of...

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HK Connect SOUTHBOUND Flows (To 28 Mar 2024); Strong Net Buying on Tencent, Telcos, and Energy

HK SOUTHBOUND Connect was a net buyer again this week, but the streak of consecutive buying since Chinese New Year was broken on Monday. SOEs and...

Travis Lundy

[Tencent (700 HK, BUY, TP HK$351) TP Change]: Improvement of Earning Quality Should Be Sustainable

​Tencent's C4Q23 results show non-game revenue exceeding expectations, but market concerns linger on sustainability of shift from game to non-game...

Blue Lotus Research Institute

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs

HUGE inflows into HK stocks by HK SOUTHBOUND Connect led by Tencent and the Tracker Fund. High-div SOEs were the main target before. Still seeing...

Travis Lundy

Tencent Posts Weaker Quarterly Results Amid Gaming Challenges

Tencent Holdings Ltd. (腾讯) reported weaker-than-expected results in the fourth quarter of 2023, as the Chinese internet behemoth faced challenges...

Caixin Global

Tencent (700 HK) - Unleashing Business Model Advantages

Tencent announced its 4Q23 results on 20 Mar: total revenue grew by 7% YoY to RMB155.2bn in 4Q23, largely in line with our/consensus estimate of...

CMB International

Tencent's C4Q23 results show non-game revenue exceeding expectations, but market concerns linger on sustainability of shift from game to non-game...