...March 22, 2024 HONG KONG (S&P Global Ratings) March 22, 2024--The credit profile of Tencent Holdings Ltd. should strengthen this year. Growth in revenue and cash flow, along with self-funding investments, could more than offset a meaningful increase in shareholder returns for 2024. We see room for the company's leverage ratio to improve to 0.1x or below in 2024 and 2025, from 0.5x in 2022 and 0.1x-0.2x in 2023. Though growth in online games revenue (30% of overall revenues in 2023) for Tencent (A+/Stable/--) will likely slow down considerably in 2024, in our view, contributions from online advertising, fintech, and business services will likely rise 10%-20%. Online games revenue for the fourth quarter of 2023 declined due to lower monetization of existing games, according to results released March 20, 2024. Though Tencent pointed to efforts to improve monetization for existing and new games, we are less optimistic on growth for this segment, particularly for domestic games (see "Credit...
