Bulletin: Tencent's Cost Cuts Put It On The Right Track

This report does not constitute a rating action. HONG KONG (S&P Global Ratings) Aug. 19, 2022--Tencent Holdings Ltd.?s cash flows and leverage should stabilize in the coming quarters and underpin our 'A+/Stable/--' issuer credit rating on the company. The second quarter results of the China-based provider of internet services support our view. Although Tencent's revenues could decline modestly over the coming quarters, the company?s cost cutting measures will support its profit margins, in our assessment. Sales and marketing expenses fell 21% year on year during the quarter ended June 30, 2022, and we expect more cost reductions for general and administrative expenses and cost of goods sold as the company enacts its second phase of cost cuts. Tencent also reduced

...HONG KONG (S&P Global Ratings) Aug. 19, 2022--Tencent Holdings Ltd.'s cash flows and leverage should stabilize in the coming quarters and underpin our 'A+/Stable/--' issuer credit rating on the company. The second quarter results of the China-based provider of internet services support our view. Although Tencent's revenues could decline modestly over the coming quarters, the company's cost cutting measures will support its profit margins, in our assessment. Sales and marketing expenses fell 21% year on year during the quarter ended June 30, 2022, and we expect more cost reductions for general and administrative expenses and cost of goods sold as the company enacts its second phase of cost cuts. Tencent also reduced its investment spending (including capital expenditure) during the quarter, which resulted in net cash inflows during the first half of 2022, despite declining operating cash flow. Our net debt-to-EBITDA forecast of 0.8x for the company remains unchanged for 2022, compared with...

Bulletin