$TENCENT (00700.HK)$$Tencent (TCEHY.US)$ KGI report on Tence...

KGI report on Tencent.

Tencent Holdings Ltd is an investment holding company primarily engaged in the provision of value-added services (VAS), online advertising services, as well as FinTech and business services. The Company primarily operates through four segments. The VAS segment is mainly engaged in the provision of online games, video account live broadcast services, paid video membership services and other social network services. The Online Advertising segment is mainly engaged in media advertising, social and other advertising businesses. The FinTech and Business Services segment mainly provides commercial payment, FinTech and cloud services. The Others segment is principally engaged in the investment, production and distribution of films and television program for third parties, copyrights licensing, merchandise sales and various other activities.

A Chinese-made game backed by Tencent Holdings Ltd., Black Myth: Wukong, became the fourth most-played title on Steam within hours of its launch yesterday. This rapid ascent saw the action-adventure game surpass 1.3mn concurrent players, outpacing the debut records of highly anticipated titles like Cyberpunk 2077 and Elden Ring, according to SteamDB. This strong initial performance signals potential recovery in China's $40bn gaming industry, which has been under intense regulatory scrutiny in recent years.

China's gaming industry continues its rebound with the approval of 105 new video game titles in Jul 2024, maintaining the steady flow of approvals seen throughout the year. Notable titles in this latest batch include Tencent's Arena Breakout: Infinite and Mihoyo's Xingbu Gudi. This follows the approval of 115 titles in Jan 2024, the largest batch in 18 months, which has significantly boosted market confidence. Since the government resumed approving new game licenses in 2023, China's gaming market has been on the mend, growing nearly 14% last year to reach almost 303 billion yuan, with the number of gamers hitting a record 668 million. The continued approval of new games and the recovery of the gaming market are expected to further drive sales for companies in the industry.

1H24 revenue increased 7.2% YoY to RMB320.6bn in 1H24, compared with RMB299.2bn in 1H23. Net profit rose 72.1% to RMB89.5bn in 1H24, compared to RMB52.0bn in 1H23. Basic earnings per share was RMB9.59 in 1H24, compared to RMB5.49 in 1H23.