Tencent Holdings Ltd.

Overview Key strengths Key risks Market leader in China's instant messaging, payments, as well as media and entertainment services. Tight regulatory oversight and competitive pressure. Strong secular growth for online services and entertainment in China. Revenue concentration in China. Large cash balance and strong free cash flow. Large investment appetite. Tencent should experience a moderate recovery in 2023 and 2024, with revenue growth of about 10% in 2023 and 8% in 2024. That's up from a 1% decline in 2022. A stable regulatory environment supports growth, encouraging internet companies to become more confident about expenditure that targets growth in core businesses. Higher economic growth, particularly for offline retailers, also benefits Tencent's advertising and fintech businesses. This is somewhat offset by

... recovery to benefit Tencent in 2023. Tencent should experience a moderate recovery in 2023 and 2024, with revenue growth of about 10% in 2023 and 8% in 2024. That's up from a 1% decline in 2022. A stable regulatory environment supports growth, encouraging internet companies to become more confident about expenditure that targets growth in core businesses. Higher economic growth, particularly for offline retailers, also benefits Tencent's advertising and fintech businesses. This is somewhat offset by a low key recovery in domestic games, given competition from other online entertainment platforms and relatively high penetration of online games in China. Cash flow and leverage should still see a meaningful improvement in 2023 given recovering operating cash flows and stable investment spending with few investment targets in China. Weixin Video Accounts could be important for Tencent's long-term competitive position. With short-form video apps...

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