Bulletin: Changes In Tencent's Business Mix Will Enhance Operating Resilience

HONG KONG (S&P Global Ratings) Nov. 17, 2023--Ongoing favorable shifts in the business mix of Tencent Holdings Ltd. will improve its business diversity and operating resilience. New services (such as Mini Games and Video Accounts), international games, and fintech have been driving this shift, as we expected. Such businesses helped revenue and profitability improve in the third quarter of 2023. We believe Tencent (A+/Stable/--) will maintain high profitability and reduce leverage over the next two years. Online advertising revenue for the China-based internet company rose 20% year on year during the quarter. This outpaced average industry growth of 3.6 %, based on QuestMobile's data. Profitable new services such as Video Accounts and Weixin Search were the main drivers. We forecast

...November 17, 2023 HONG KONG (S&P Global Ratings) Nov. 17, 2023--Ongoing favorable shifts in the business mix of Tencent Holdings Ltd. will improve its business diversity and operating resilience. New services (such as Mini Games and Video Accounts), international games, and fintech have been driving this shift, as we expected. Such businesses helped revenue and profitability improve in the third quarter of 2023. We believe Tencent (A+/Stable/--) will maintain high profitability and reduce leverage over the next two years. Online advertising revenue for the China-based internet company rose 20% year on year during the quarter. This outpaced average industry growth of 3.6 %, based on QuestMobile's data. Profitable new services such as Video Accounts and Weixin Search were the main drivers. We forecast the segment will maintain its momentum, with revenue increasing 22% in 2023 and 20% in 2024. Other services such as Mini Games, commercial payment, and Video Accounts eCommerce also supported...

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