...August 16, 2024 HONG KONG (S&P Global Ratings) Aug. 16, 2024--Tencent Holdings Ltd. is on track to return to net cash by year end. AI, Video Accounts, and investments in new and old games are driving performance for the China-based internet services firm with a focus on games, social networks and fintech services. The strong momentum should continue over the next year (see "Tencent's Accelerating Profit Growth Is Credit Positive," May 17, 2024). Tencent (A+/Stable/--) is gaining market share in online advertising, despite a weak overall ad market. AI initiatives drive higher clickthrough rates across its platform, particularly for Video Accounts (a short video service leveraging the firm's strength in messaging). User engagement is robust for Video Accounts, driving ad performance; ad revenues on Video Accounts grew over 80% year-on-year even without meaningful additions to ad inventory. This suggests there is more room for monetization opportunities for the entity. That said, we are cautious...
