Latest news with #JianShiCortesi
Straits Times
4 days ago
- Business
- Straits Times
Tencent investors eye path to record in cheap stock valuations
Tencent still has not erased the hit from China's corporate crackdowns, which drove its stock to a five-year low in 2022. HONG KONG – As tech megacaps around the world climb to new records, investors see a chance for Tencent shares to finally regain their former glory. The Hong Kong-listed stock has added more than US$150 billion (S$192.5 billion) in market value this year yet it remains 26 per cent below its all-time high. And it is trading at a substantial discount to global tech peers from Meta to Sony. Tencent has more than cheapness going for it, with earnings estimates higher than ever ahead of the company's results due today , and big expectations for game titles including Valorant Mobile. So how close might the shares be to a new peak? 'It's just a matter of time,' said Ms Jian Shi Cortesi, a fund manager at Gam Investment Management, which has Tencent as the largest holding in its flagship fund. The ubiquity of WeChat will make Tencent a long-term winner in e-commerce, and its stock valuations are 'reasonable' on historical and peer comparisons. Tencent still has not erased the hit from China's corporate crackdowns, which drove its stock to a five-year low in 2022. It has not benefited as much as peers such as Alibaba Group from this year's artificial intelligence (AI) boom, nor has it suffered from extreme competition like Meituan. Shares of Tencent are trading at 17.6 times estimated forward earnings, below their five-year average of 20 times. Meta and Sony are both at around 22 times while Japanese video game company Nintendo trades at nearly 40 times – all three of those reached new record share prices last week. 'I have no doubt that Tencent will return to historical levels,' said Morningstar analyst Ivan Su. The market still is not factoring in how much AI will help the company's advertising and gaming businesses, but 'I think those earnings revisions will eventually come through.' Top stories Swipe. Select. Stay informed. Singapore Sengkang-Punggol LRT line back to full service: SBS Transit World US trade team will meet Chinese officials in two or three months, Bessent says Singapore From survivable to liveable: The making of a green city Asia DPM Gan kicks off India visit in Mumbai as Singapore firms ink investment agreements Multimedia World Photography Day: Celebrating the art of image-making World Ukraine, sidelined in Trump-Putin summit, fights Russian grab for more territory Opinion Singpass use in dating apps raises difficult questions Singapore SG60: Many hands behind Singapore's success story Even still, while many Chinese firms are seeing margins squeezed by price wars, the average estimate for Tencent's 12-month forward earnings per share has climbed to an all-time high. Its earnings report is expected to show revenue rose 11 per cent in the three months ended June, a third-straight quarter of double-digit growth. Advertising momentum is a key point, 'especially if its AI efforts help drive growth momentum in its video accounts services,' said Ms June Lui, a portfolio manager at Polen Capital. 'Tencent has a diversified business portfolio and that helps make it more defensive than peers from headwinds like tariffs and macroeconomic uncertainties,' she said. Investors have turned more sanguine, with the cost of hedging against declines in shares of Tencent dropping from a peak in April. The street is overwhelmingly bullish on Asia's second-largest stock, with its 66 buy recommendations the most in the region. Beyond earnings, the market is looking forward to the Aug 19 launch of Valorant Mobile, a highly-anticipated shooting game. The title should help drive Tencent's revenue from later this year through the first half of 2026, according to Goldman Sachs. Meanwhile, 'Delta Force is emerging as a potential franchise-level evergreen game,' analyst Ronald Keung wrote in a note last week. 'Gaming remains a sector with strong-visibility cash generation –particularly at a time when much of China internet transaction-based platforms are seeing earnings pressure.' BLOOMBERG
Business Times
4 days ago
- Business
- Business Times
Tencent investors eye path to record in cheap stock valuations
[HONG KONG] As tech megacaps around the world climb to new records, investors see a chance for Tencent Holdings shares to finally regain their former glory. The Hong Kong-listed stock has added more than US$150 billion in market value this year, yet it remains 26 per cent below its all-time high. And it's trading at a substantial discount to global tech peers from Meta Platforms to Sony Group. Tencent has more than cheapness going for it, with earnings estimates higher than ever ahead of the company's results due on Wednesday (Aug 13), and big expectations for game titles including Valorant Mobile. So how close might the shares be to a new peak? 'It's just a matter of time,' said Jian Shi Cortesi, a fund manager at Gam Investment Management, which has Tencent as the largest holding in its flagship fund. The ubiquity of WeChat will make Tencent a long-term winner in e-commerce, and its stock valuations are 'reasonable' on historical and peer comparisons. Tencent still has not erased the hit from China's corporate crackdowns, which drove its stock to a five-year low in 2022. It has not benefited as much as peers such as Alibaba Group Holding from this year's artificial intelligence (AI) boom, nor has it suffered from extreme competition such as Meituan. Shares of Tencent are trading at 17.6 times estimated forward earnings, below their five-year average of 20 times. Meta and Sony are both at around 22 times, while Japanese video game company Nintendo trades at nearly 40 times, all three of those reached new record share prices last week. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'I have no doubt that Tencent will return to historical levels,' said Morningstar analyst Ivan Su. The market still is not factoring in how much AI will help the company's advertising and gaming businesses, but 'I think those earnings revisions will eventually come through.' Still, while many Chinese firms are seeing margins squeezed by price wars, the average estimate for Tencent's 12-month forward earnings per share has climbed to an all-time high. Its earnings report is expected to show revenue rose 11 per cent in the three months ended June, a third-straight quarter of double-digit growth. Advertising momentum is a key point, 'especially if its AI efforts help drive growth momentum in its video accounts services', said June Lui, a portfolio manager at Polen Capital. 'Tencent has a diversified business portfolio, and that helps make it more defensive than peers from headwinds such as tariffs and macroeconomic uncertainties,' she said. Investors have turned more sanguine, with the cost of hedging against declines in shares of Tencent dropping from a peak in April. The street is overwhelmingly bullish on Asia's second-largest stock, with its 66 buy recommendations the most in the region. Beyond earnings, the market is looking forward to next Tuesday's launch of Valorant Mobile, a highly anticipated shooting game. The title should help drive Tencent's revenue from later this year through the first half of 2026, according to Goldman Sachs. Meanwhile, 'Delta Force is emerging as a potential franchise-level evergreen game', analyst Ronald Keung wrote in a note last week. 'Gaming remains a sector with strong-visibility cash generation -particularly at a time when much of China Internet transaction-based platforms are seeing earnings pressure.' BLOOMBERG
Yahoo
10-02-2025
- Business
- Yahoo
DeepSeek Sparks Hope for Renaissance in China's Tech Megacaps
(Bloomberg) -- The rise of Chinese AI startup DeepSeek is forcing investors to re-evaluate the nation's leading internet companies and their potential to capitalize on artificial intelligence that's boosted global peers. Nice Airport, If You Can Get to It: No Subway, No Highway, No Bridge Sin puente y sin metro: el nuevo aeropuerto de Lima es una debacle The Forgotten French Architect Who Rebuilt Marseille Citadel to Leave Namesake Chicago Tower as Employees Relocate In New Orleans, an Aging Dome Tries to Stay Super Market watchers are increasingly touting how the AI model will be a game changer for Chinese tech companies and their stocks, which have remained under pressure by concerns over the economy. Already Alibaba Group Holding Ltd. shares surged last week over such hype, with a gauge of tech stocks entering a bull market on Friday. 'The refreshed attention could shift investor focus from 'thinking about risks' to 'thinking about potential' when they look at the large Chinese internet names,' said Jian Shi Cortesi, a portfolio manager at Gam Investment Management in Zurich. 'This is positive, especially given the big valuation discount of these names compared to US peers,' she added. The upcoming results season may provide stock catalysts in the form of management comments on progress with AI models and demand for cloud services. Meanwhile, options traders have boosted bets on China tech, and the stocks remain historically cheap. The Hang Seng Tech Index entered a bull market after last week's 9% gain. Still, the gauge of Hong Kong-listed Chinese tech stocks is trading at less than 17 times estimated forward earnings, below the Nasdaq 100's 27 times and even its own five-year average of 25 times. Multiples for China's tech stocks have suffered from weak demand among domestic consumers as well as intense competition in their e-commerce and cloud businesses. That comes as geopolitical tensions with the US have also reduced global appetite for the nation's equities. 'The lack of foreign investor interest and liquidity in the market was one reason it was a value trap,' said Alex Au, managing director at Alphalex Capital Management HK Ltd. 'Now, DeepSeek has significantly aroused international investors' interest in Chinese tech again and should help narrow the valuation gap.' The excitement extends beyond the startup level, with Alibaba announcing the latest version of its AI model just days after DeepSeek's release, and touting even better results. That drove its Hong Kong-listed shares up 13% last week. Competing offerings from other majors include Tencent Holdings Ltd.'s Hunyuan, Baidu Inc.'s Ernie Bot and ByteDance Ltd.'s Doubao. The latest wave of services should accelerate AI adoption by enterprises as well as consumers, while also reducing costs for hyperscalers. It also means a boon to cloud service providers like Alibaba and Tencent, given that users rely on cloud computing to run AI infrastructure. 'The much cheaper and capable model introduced by DeepSeek should help democratize AI in China and encourage usage and spending,' said Alphalex Capital's Au. 'We think the cloud operators like Alibaba will be major beneficiaries.' Cloud business growth for Chinese hyperscalers has lagged that of major US peers so far. Analysts estimate cloud revenues for the December quarter rose 9.7% from a year ago at Alibaba and 7.6% at Baidu, compared with 19% at Inc. and 31% at Microsoft Corp. China's tech stocks still face pressure from US tariffs on e-commerce shipments as well as Washington's efforts to restrict the Asian nation's access to the most advanced chips. But DeepSeek has helped show that the focus isn't always on highest level of technology. Options bets on the Hang Seng Tech Index have been on the rise, with volumes touching their highest level since early October on Friday. About 6,500 bullish contracts traded that day, almost double the number of puts. June 6,000 calls, which have a strike price 16% above Friday's close, were the most active. 'There has been a particularly disappointing investment story for Tencent and Alibaba for many years now,' said Richard Clode, a portfolio manager at Janus Henderson. 'We're looking for that new narrative to get excited about and now we've got one, which is actually a very credible player in AI.' Top Tech Stories Elon Musk said he isn't interested in buying TikTok, the popular social video app the US has tried to ban over national security concerns with its Chinese owner Bytedance Ltd. France is set to announce a total of €109 billion ($113 billion) in investment in artificial intelligence projects in the country by companies, funds and other sources over the coming years, President Emmanuel Macron said on the eve of a two-day AI summit in Paris. Brookfield Asset Management plans to invest €20 billion ($20.7 billion) to develop data centers and AI infrastructure in France over the next five years, as the competition to dominate artificial intelligence intensifies among global powers. WiseTech Global Ltd.'s board is assessing two confidential complaints about the company's founder and former chief executive officer, Richard White, almost four months after he was forced to step aside following a series of media reports about his conduct. --With assistance from Winnie Hsu, Henry Ren and Cecile Vannucci. 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