Tencent Holdings (0700) AI Stock Analysis

• Market Cap: $5.83T
• Dividend Yield: 0.7%
• Average Volume (3M): 19.96M
• Price to Earnings (P/E): 26.2
• Beta (1Y): 1.20
• Revenue Growth: 11.41%
• EPS Growth: 39.10%
• Country: HK
• Employees: 110,558
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 7.41
• Shares Outstanding: 9,162,491,000
• 10 Day Avg. Volume: 20,270,798
• 30 Day Avg. Volume: 19,963,836
• PEG Ratio: 0.26
• Price to Book (P/B): 3.73
• Price to Sales (P/S): 5.50
• P/FCF Ratio: 19.97
• Enterprise Value/Market Cap: 0.82
• Enterprise Value/Revenue: 6.79
• Enterprise Value/Gross Profit: 12.42
• Enterprise Value/Ebitda: 18.68
• 1Y Price Target: $706.89
• Price Target Upside: 10.28% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 14

• Rating: 79 Outperform
• Price Target: HK$736.00 ▲(14.82% Upside)

Tencent Holdings receives a strong overall score of 79, driven primarily by its robust financial performance and positive earnings call. The technical analysis supports a bullish outlook, although the valuation suggests the stock is priced for growth. The earnings call underscored strategic advancements, particularly in AI, which bolster long-term growth prospects. Monitoring cash flow trends and valuation metrics will be crucial as the company continues to invest in growth initiatives.

Positive Factors

Negative Factors

Tencent Holdings Business Overview & Revenue Model

Company Description

Tencent Holdings Limited is a Chinese multinational conglomerate holding company, primarily involved in various internet-related services and products, entertainment, AI, and technology. It is one of the world's largest technology companies, focusing on social media, gaming, and digital content. Tencent is well-known for its innovative platforms like WeChat and QQ, which dominate social messaging in China. It also has a significant presence in online gaming, with popular titles such as Honor of Kings and investment stakes in global gaming companies like Epic Games and Riot Games.

How the Company Makes Money

Tencent makes money through several key revenue streams: social network services, online advertising, fintech and business services, and online gaming. The company generates significant revenue from its dominant messaging platforms WeChat and QQ through advertising and value-added services. Online gaming is a major contributor to Tencent's revenue, with income derived from both domestic and international markets through game sales, in-game purchases, and licensing. Additionally, Tencent has a growing fintech sector with its WeChat Pay and QQ Wallet services, earning transaction fees and financial services income. The company's cloud services and other tech solutions also contribute to its earnings, alongside strategic investments and partnerships in various industries, including entertainment, e-commerce, and artificial intelligence.

Tencent Holdings Financial Statement Overview

Summary

Tencent Holdings demonstrates strong profitability with a robust gross profit margin and efficient operations. The balance sheet is solid with low leverage, and cash flows are stable despite a slight decline in free cash flow growth.

Income Statement

Tencent Holdings demonstrates strong profitability with a robust gross profit margin of 53.7% and a net profit margin of 29.4% for the TTM. The revenue growth rate from the previous year to TTM is 3.1%, indicating steady growth. The EBIT margin of 31.3% and EBITDA margin of 36.2% reflect efficient operations and cost management.

Balance Sheet

The balance sheet is solid with a debt-to-equity ratio of 0.39, indicating a conservative leverage approach. ROE stands at 19.2%, showcasing effective use of equity to generate profits. An equity ratio of 54.2% highlights a strong equity base, contributing to financial stability.

Cash Flow

Cash flow analysis reveals a stable financial position with a free cash flow to net income ratio of 0.89, reflecting efficient cash generation relative to earnings. The operating cash flow to net income ratio is 1.31, indicating strong operational cash generation. However, the free cash flow growth rate shows a slight decline of 1.8% from the previous year.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	704.16B	660.26B	609.01B	554.55B	560.12B	482.06B
Gross Profit	384.99B	349.25B	293.11B	238.75B	245.94B	221.53B
EBITDA	256.00B	310.14B	183.94B	134.30B	313.65B	238.25B
Net Income	208.00B	194.07B	115.22B	188.24B	224.82B	159.85B
Balance Sheet
Total Assets	2.01T	1.78T	1.58T	1.58T	1.61T	1.33T
Cash, Cash Equivalents and Short-Term Investments	380.44B	343.16B	379.15B	289.48B	262.35B	227.88B
Total Debt	412.49B	357.94B	371.24B	359.14B	323.48B	262.46B
Total Liabilities	810.46B	727.10B	703.57B	795.27B	735.67B	555.38B
Stockholders Equity	1.11T	973.55B	808.59B	721.39B	806.30B	703.98B
Cash Flow
Free Cash Flow	173.56B	181.76B	174.56B	95.24B	113.02B	127.52B
Operating Cash Flow	283.33B	258.52B	221.96B	146.09B	175.19B	194.12B
Investing Cash Flow	-149.15B	-122.19B	-125.16B	-104.87B	-178.55B	-181.96B
Financing Cash Flow	-106.82B	-176.49B	-82.57B	-59.95B	21.62B	13.65B

Tencent Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 641.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0700, the sentiment is Positive. The current price of 641 is above the 20-day moving average (MA) of 621.38, above the 50-day MA of 584.41, and above the 200-day MA of 495.27, indicating a bullish trend. The MACD of 18.48 indicates Negative momentum. The RSI at 64.10 is Neutral, neither overbought nor oversold. The STOCH value of 52.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0700.

Tencent Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0700	79 Outperform	$5.83T	26.19	21.04%	0.70%	11.41%	39.10%
1024	79 Outperform	319.63B	18.19	24.73%	―	10.72%	17.05%
9888	77 Outperform	373.20B	12.79	10.13%	―	-1.69%	42.04%
9898	71 Outperform	23.82B	8.88	8.64%	6.60%	0.99%	14.41%
0772	60 Neutral	43.41B	300.99	-1.14%	―	-10.26%	-85.75%
1896	56 Neutral	9.56B	121.25	2.01%	3.74%	-7.61%	-90.51%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

Tencent Holdings Corporate Events

Tencent Grants Share Awards to Boost Employee Retention

Tencent Holdings announced the grant of 23,935,991 Awarded Shares to Employee Participants under its Share Award Scheme, representing approximately 0.261% of the total shares in issue. The awards, which do not require shareholder approval, are intended to incentivize and retain employees, with a vesting period ranging from 12 to 48 months. This move is aimed at encouraging continuous contribution to the company’s operations and long-term growth, reflecting Tencent’s commitment to rewarding its workforce and strengthening its market position.

Tencent Grants Share Options to Boost Employee Engagement

Tencent Holdings announced the grant of 597,357 share options to employee participants under its Share Option Scheme, with an exercise price of HKD590 per share. This initiative aims to retain and incentivize employees, encouraging their contribution to the company’s long-term growth and success, without exceeding the 1% individual limit of shares in issue.

Tencent Reports Strong Growth in Q2 2025 Financial Results

Tencent Holdings announced its unaudited consolidated financial results for the three and six months ending June 30, 2025, showcasing robust growth. The company reported a year-on-year revenue increase of 15% for the second quarter and 14% for the first half of the year, driven by strong performances across its core business segments. Gross profit and operating profit also saw significant increases, indicating improved operational efficiency and market positioning. The results reflect Tencent’s continued strength in its digital ecosystem, benefiting stakeholders with increased earnings per share and profitability.

Tencent Strengthens Governance with New Nomination Committee Appointment

Tencent Holdings Limited has announced the appointment of Professor Ke Yang as a member of its Nomination Committee, effective from June 27, 2025. This strategic appointment is expected to enhance the governance structure of Tencent, potentially impacting its decision-making processes and reinforcing its commitment to strong corporate governance practices.

Tencent Holdings Announces Board Restructuring

Tencent Holdings Limited has announced changes to its board of directors, effective from June 27, 2025. The board will consist of Executive Director Ma Huateng, several Non-Executive Directors, and Independent Non-Executive Directors. The company has also updated the membership of its five board committees, with Ke Yang being appointed as a member of the Nomination Committee. These changes are expected to influence Tencent’s governance and strategic decision-making, potentially impacting its operations and market positioning.

Tencent Holdings Enhances Governance with New Audit Committee

Tencent Holdings Limited has established an Audit Committee as part of its corporate governance structure. This committee, composed of non-executive directors, is tasked with overseeing the company’s financial reporting processes, audit activities, and ensuring compliance with applicable standards. The committee is authorized to investigate activities within its scope, seek information from employees, and obtain external professional advice if necessary. This move is expected to enhance transparency and accountability, strengthening Tencent’s industry positioning and reassuring stakeholders of its commitment to robust governance practices.

Tencent Establishes Nomination Committee to Enhance Board Governance

Tencent Holdings Limited has established a Nomination Committee to ensure fair and transparent nominations for its Board of Directors. The committee, comprising a majority of independent non-executive directors, is tasked with reviewing the board’s structure and diversity, identifying qualified individuals for board membership, and making recommendations on director appointments and succession planning. This move is expected to enhance corporate governance and align the board’s composition with the company’s strategic goals.

Tencent Holdings Schedules Board Meeting for Interim Results and Dividend Consideration

Tencent Holdings Limited has announced that its board of directors will meet on August 13, 2025, to approve the company’s unaudited interim results for the first half of the year ending June 30, 2025. This meeting will also consider the payment of an interim dividend, which could have implications for stakeholders and reflect the company’s financial health and strategic direction.