Tencent Holdings (0700) AI Stock Analysis

• Market Cap: $5.71T
• Dividend Yield: 0.73%
• Average Volume (3M): 17.35M
• Price to Earnings (P/E): 25.6
• Beta (1Y): 1.21
• Revenue Growth: 13.15%
• EPS Growth: 30.78%
• Country: HK
• Employees: 110,558
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 8.34
• Shares Outstanding: 9,153,673,000
• 10 Day Avg. Volume: 16,885,946
• 30 Day Avg. Volume: 17,348,439
• 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: 0.84
• Enterprise Value/Revenue: 6.79
• Enterprise Value/Gross Profit: 12.42
• Enterprise Value/Ebitda: 17.44
• 1Y Price Target: $761.06
• Price Target Upside: 23.55% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 33
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: HK$686.00 ▲(11.36% Upside)

Tencent Holdings' overall stock score is driven by strong financial performance and positive earnings call highlights, particularly in gaming and marketing services. The company's strategic investments in AI and technology are yielding results, contributing to robust growth. However, technical analysis indicates bearish momentum, and valuation metrics suggest the stock is fairly valued. Monitoring cash flow trends and addressing challenges in content releases and expenses will be crucial for future performance.

Positive Factors

Revenue Growth

Tencent's strong revenue growth indicates robust demand across its segments, showcasing effective business strategies and market expansion.

Gaming Segment Expansion

The significant growth in international gaming revenue highlights Tencent's successful global expansion and competitive positioning in the gaming industry.

AI and Technology Advancements

Investments in AI and technology enhance operational efficiency and innovation, strengthening Tencent's competitive edge and market adaptability.

Negative Factors

Increased Expenses

Rising expenses could pressure margins and profitability, necessitating careful cost management to sustain long-term financial health.

Challenges in Cloud Service Growth

Supply chain issues in cloud services may hinder growth potential, impacting Tencent's ability to capitalize on the expanding cloud market.

Long-form Video Subscription Decline

A decline in video subscription revenue suggests challenges in content delivery and competition, potentially affecting Tencent's media segment growth.

Tencent Holdings Business Overview & Revenue Model

Company Description

Tencent Holdings Limited, an investment holding company, provides value-added services (VAS) and Online advertising services in Mainland China and internationally. The company operates through VAS, Online Advertising, FinTech and Business Services, and Others segments. It offers online games and social network services; FinTech and cloud services, and online advertising services. The company is also involved in the production, investment, and distribution of films and television programs for third parties, as well as copyrights licensing, merchandise sales, and other activities. n addition, it develops software; develops and operates online games; and provides information technology, information system integration, asset management, online literature, and online music entertainment services. Tencent Holdings Limited company was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.

How the Company Makes Money

Tencent generates revenue through several key streams. The largest portion comes from its online gaming segment, which includes both self-developed games and distribution of games developed by third parties. Social networks, primarily driven by WeChat and QQ, contribute significantly through subscription services, advertising, and virtual goods sales. Tencent also monetizes its fintech services by providing payment solutions, wealth management, and other financial services. Cloud services, which have seen substantial growth, offer infrastructure and services to businesses across various industries. Strategic partnerships, investments, and acquisitions in the tech and gaming sectors further enhance its revenue potential. Overall, Tencent's diversified business model allows it to capitalize on various consumer and enterprise demands in the digital economy.

Tencent Holdings Financial Statement Overview

Summary

Tencent Holdings demonstrates strong financial performance with robust profitability and a solid balance sheet. The income statement reflects consistent revenue and profit growth, while the balance sheet shows a healthy capital structure with manageable debt levels. Although the cash flow statement indicates some pressure on free cash flow growth, the company maintains a stable cash flow position. Overall, Tencent is well-positioned financially, but monitoring cash flow trends will be important moving forward.

Income Statement

Tencent Holdings shows strong profitability with a TTM gross profit margin of 54.67% and a net profit margin of 29.54%. The revenue growth rate of 3.44% in the TTM indicates steady growth, although it has slowed compared to previous years. The EBIT margin of 33.70% and EBITDA margin of 36.35% reflect efficient operations. Overall, the income statement demonstrates robust financial health with consistent revenue and profit growth.

Balance Sheet

The company's balance sheet is solid with a debt-to-equity ratio of 0.37, indicating a manageable level of debt. The return on equity (ROE) is strong at 20.59%, showcasing effective use of equity to generate profits. The equity ratio stands at 55.39%, reflecting a healthy capital structure. While the balance sheet is stable, the slight increase in debt levels over the years warrants monitoring.

Cash Flow

Tencent's cash flow statement reveals a slight decline in free cash flow growth at -2.77% in the TTM, which could be a concern if the trend continues. However, the operating cash flow to net income ratio of 0.60 and free cash flow to net income ratio of 0.68 indicate that the company generates sufficient cash from operations to cover its net income. Overall, the cash flow position is stable but shows signs of pressure.

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	274.20B	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	1.79T	1.58T	1.56T	1.61T	1.33T
Cash, Cash Equivalents and Short-Term Investments	380.44B	341.57B	375.91B	288.13B	264.35B	229.83B
Total Debt	412.49B	357.94B	370.14B	354.07B	322.89B	261.82B
Total Liabilities	810.46B	733.37B	708.09B	788.90B	735.46B	555.50B
Stockholders Equity	1.11T	973.07B	806.20B	711.20B	804.85B	702.25B
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: 616.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• 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 616 is above the 20-day moving average (MA) of 615.15, below the 50-day MA of 631.96, and above the 200-day MA of 557.30, indicating a neutral trend. The MACD of -7.25 indicates Positive momentum. The RSI at 48.11 is Neutral, neither overbought nor oversold. The STOCH value of 38.17 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	75 Outperform	$5.71T	25.64	20.51%	0.73%	13.15%	30.78%
1024	71 Outperform	HK$291.72B	15.39	25.67%	―	11.37%	16.74%
9888	63 Neutral	HK$335.25B	11.49	3.29%	―	-2.92%	-57.12%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
9898	60 Neutral	HK$20.59B	7.67	12.49%	8.06%	-1.40%	22.37%
0772	52 Neutral	$43.27B	300.00	0.67%	―	-10.26%	-85.75%
1896	49 Neutral	HK$8.16B	99.43	0.82%	4.45%	-7.61%	-90.51%

Tencent Holdings Corporate Events

Tencent Grants Shares to Employees Under Award Scheme

Tencent Holdings announced the grant of 1,588,368 awarded shares to employee participants under its Share Award Scheme, representing approximately 0.0174% of the total shares in issue. This initiative, not requiring shareholder approval, aims to incentivize and retain employees, with a vesting period ranging from 13 to 49 months, reflecting the company’s commitment to its workforce’s long-term contribution to its growth and success.

Tencent Grants Share Options to Employees to Boost Engagement

Tencent Holdings announced the grant of 20,287 options to subscribe for shares to its employee participants under its Share Option Scheme. This move is aimed at retaining, incentivizing, and rewarding employees, encouraging their continued contribution to the company’s growth and success. The options have an exercise price of HKD649.3 per share, with a vesting period of approximately 35 months. This strategic initiative reflects Tencent’s commitment to fostering employee engagement and aligning their interests with the company’s long-term objectives.

Tencent Holdings Reports Strong Financial Growth in Q3 2025

Tencent Holdings announced its unaudited consolidated financial results for the three and nine months ending September 30, 2025, showing a strong performance with significant year-on-year growth. The company reported a 15% increase in quarterly revenues and a 14% rise over nine months, alongside notable improvements in gross and operating profits. This financial upturn reflects Tencent’s robust market positioning and operational efficiency, potentially enhancing stakeholder confidence and reinforcing its competitive stance in the technology sector.

Tencent Completes CNY9 Billion Note Issuance Under Global Programme

Tencent Holdings Limited has successfully completed the issuance of CNY9 billion in notes under its Global Medium Term Note Programme as of September 23, 2025. This issuance, which includes notes maturing in 2030, 2035, and 2055, is part of Tencent’s strategic financial management, potentially enhancing its liquidity position and supporting its long-term growth initiatives.

Tencent Holdings to Review Q3 Results and Dividend Prospects

Tencent Holdings Limited has announced that its Board of Directors will convene on November 13, 2025, to approve the company’s unaudited third quarter results and potentially declare a dividend. This meeting is significant as it will provide insights into Tencent’s financial performance for the three and nine months ending September 30, 2025, which could impact its market positioning and stakeholder interests.

Tencent Holdings Prices CNY9 Billion Notes for Corporate Expansion

Tencent Holdings has announced the pricing of CNY9 billion notes under its Global Medium Term Note Programme, with the proceeds intended for general corporate purposes. The notes, expected to be issued on 23 September 2025, will not be registered under the U.S. Securities Act and will be offered in offshore transactions to non-U.S. persons, highlighting Tencent’s strategic financial management and its focus on expanding its capital market activities.

Tencent Updates Global Medium Term Note Programme and Plans International Note Issuance

Tencent Holdings has updated its Global Medium Term Note Programme to include recent corporate and financial information, and plans to issue notes to professional investors internationally. The issuance, dependent on market conditions and investor interest, aims to strengthen Tencent’s financial position, with J.P. Morgan, BofA Securities, and Morgan Stanley appointed as arrangers.