...HONG KONG (S&P Global Ratings) May 20, 2022--Tencent Holdings Ltd. could be nearing the bottom after several quarters of deterioration, including first-quarter revenues and EBITDA below our already lowered expectations. Indications of a less harsh regulatory environment and the China internet company's efforts to shore up profitability point to more stable cash flows and leverage. Tencent's stable market leadership and healthy credit metrics support the rating (A+/Stable/--). Improvements won't likely arrive until the end of 2022 or early 2023, however. Tencent may incur its first-ever year-on-year (yoy) revenue decline in the April to June 2022 reporting period. The key drags are softening games revenues (including its international segment), Shanghai's lockdown, and difficult comparisons due to regulatory actions that occurred in the second half of 2021. The second quarter could mark the trough for Tencent, assuming lockdowns do not spread across more cities in China. Most notably, recent...
