Equity Analysis /
Hong Kong

HK : Tencent - 3Q21 top-line growth softer than expected; impact of new regulations emerging

    Alex Li
    Alex Li

    Research Assistant

    Mark Po
    Mark Po

    Research Analyst

    CGS-CIMB
    11 November 2021
    Published by

    Tencent released its 3Q21 results yesterday; its top line was generally below market expectations partly due to a sharp slowdown in its advertising business. Fintech and business services were the top-line growth drivers. We lowered our forecasts to reflect softer performance in the social network, games and online advertising segments. The slowdown in turnover growth may continue to create selling pressure for Tencent, but this was somewhat expected by the market. Reiterate ADD with a new DCF-based target price of HK$520.3 (down from HK$528.1), as we factored in slower revenue growth, especially in 2022. Tencent shares may react positively if the Company resumes share buybacks, which may offer a short-term trading opportunity.