$MEITUAN-W (03690.HK)$ After the Hong Kong stock market closed on November 16, Tencent released its third quarter earnings report. At the same time, it also revealed long-rumored news: the reduction of Meituan holdings.
According to the announcement issued by Tencent, Tencent held about 17.04% of Meituan's shares before this dividend payment, which is 1,054,580,992 shares. According to the plan, it will distribute 958,121,562 shares of Meituan shares to shareholders, accounting for 90.85% of Meituan shares and 15.48 of Meituan's total share capital. Based on the closing price on November 15, the total dividend amount is approximately HK$159.4 billion, corresponding to Tencent's dividend rate of 5.9%. After the dividend payment, Tencent will hold 1.56% of Meituan's shares. For Tencent shareholders, every 10 Tencent shares can receive 1 Class B Meituan stock. The last trading date for Tencent shares with the right to physically distribute Meituan shares on the Stock Exchange is expected to be January 4, 2023. The record date for determining Tencent shareholders' physical distribution rights to Meituan shares is January 10, 2023. The time for Tencent shareholders who meet the requirements to deliver and receive Meituan shares is expected to be around March 24, 2023. A small number of funds with registered addresses in the US (Tencent shareholders) will be directly distributed in cash corresponding to the number of shares due to compliance reasons. Unlike when Tencent paid dividends on JD shares, the rumor about the distribution of Meituan shares has actually been spread several times; in one foreign media alone, I have the impression that it has spread twice. $TRIP.COM-S (09961.HK)$ $TENCENT (00700.HK)$

$Hang Seng Index (800000.HK)$ The Hang Seng Index is rising more and more promising, indicating a bull market coming. Is unlimited growth possible? Will 100,000 points be the end point? [Laughing and crying emoji]. Market cheerleaders have always been abundant. The Hang Seng Index rebounded by nearly 4,000 points this month, such a large monthly rebound has rarely been seen before. In 2007, there was a two-month rebound of ten thousand points. Although it has been one of the worst-performing major financial markets globally, a deep fall followed by a dead cat bounce is normal as it has fallen behind too much. As for the reversal to a bull market, there hasn't been any improvement in the fundamentals yet. Some facelift through news may occur at year-end. Tencent's performance may not be outstanding, and stock replenishment will not stop. I am skeptical about further gains in the Hang Seng Index, and the response of derivatives differs from the spot market. The bull-bear ratio of Hang Seng Index warrants is 0.4% (24) for bulls and 99.6% (6,791) for bears, an overwhelmingly bearish scenario is rare. Yesterday, there was significant trading in Hang Seng Index period call warrants, most likely for same-day closing and not overnight holding as it would be unlikely based on yesterday's market to be major sell orders. Bearish warrants have reached a selling peak, while Hang Seng Index options are mainly for intraday institutional operations. The option premium price was higher in the middle of the month than at the beginning, no longer attractive, while period warrants are more liquid, with outstanding unclosed contracts visible. Today is Wednesday, with option premiums still at Monday's price, and settlement will be in two days. The rising Hang Seng Index corresponds to an increase in the fear index, rising with uneasy feelings, creating a stark contrast between derivatives and the spot market. It's not easy to play both Long and Short positions in the Hang Seng Index this week, as Monday and Tuesday only the latter resulted in profits. The slow transaction volume of options must have reasons behind it, making it difficult for even experienced traders to win, while beginners and conservative traders may not lose by observing from the sidelines, making less profit also means not losing. Placing Long and Short positions now may not be very rewarding. The index has high volatility, the market activity is low, which investors agree on, indicating a mature derivative market with many experienced players. The Hang Seng Index has seen a fluctuation of 1200 points this week alone, how much more room is there for an upward move? Playing both Long and Short positions is not the same as just following one direction, one needs to watch both sides.

$MEITUAN-W (03690.HK)$ Fortunately, the market has almost digested the bearish factors, and I think there are several points to focus on at the moment.
1. Although the market's expected revenue is still down year-on-year, the magnitude is only 0.68%. If the performance is a little better, it will exceed expectations. The enhanced confidence of secondary market investors when the expectation is a decline, but the actual result is growth, is doubled.
2. Although gaming revenue in Q3 is not good, the game turnover in October increased by 5%, with a 12% increase overseas, indicating some recovery. In addition, we also need to pay attention to the deferred revenue of Q3, in anticipation of its impact on the following quarters.
3. After multiple quarters of "cost reduction and efficiency improvement," Tencent's cost control may be stronger than expected, and the profit performance is likely to exceed expectations. This situation indicates that its internal operation improvement has achieved certain results. It is rumored that some business lines will need to lay off staff by the end of the year, which is good news for shareholders.
Investors who focus on Tencent's non-operating income also need to note that the companies held by Tencent, such as Meituan, Kuaishou, and PDD holdings, actually rebounded to a certain extent in Q2, which means that the fair value changes have a positive impact on them.
In general, there is a higher possibility that Tencent's Q3 financial report will exceed market expectations. From the market performance on the 15th, it can also be seen that market expectations for Tencent are further strengthening.
If you have great confidence in the financial report, you can naturally buy the underlying stock or bullish call options.
Of course, those who believe that there will be a pullback after a big rise or those who are not optimistic about the Q3 financial report can also choose to buy...

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