Author Topic: TCEHY - Tencent  (Read 19280 times)

Jurgis

  • Hero Member
  • *****
  • Posts: 4028
    • Porfolio
Re: TCEHY - Tencent
« Reply #10 on: November 02, 2017, 09:32:14 PM »
HJ, with Alibaba aren't you afraid that they might do something similar to Alipay transfer that screwed shareholders out of its ownership?

Regarding Tencent, I've invested into it around 2007 or so. If only I had bought more and held... Sold for a double maybe...  :'( I have some NPSNY now.
"Before you can be rich, you must be poor." - Nef Anyo


HJ

  • Sr. Member
  • ****
  • Posts: 429
Re: TCEHY - Tencent
« Reply #11 on: November 03, 2017, 06:40:13 AM »
Jurgis, that episode actually needs to be put into context.  It's not just a simple case of greedy management privatizing assets.  Alipay was just getting going, and would not have enjoyed the success it did as a fully owned entity of Alibaba, which is majority owned offshore.  Chinese banking regulator would never have allowed a majority foreign owned entity to control such a large part of its payment system.  When Alipay was split off, it was also no where near as successful as it has since become.  Along the way, deals needed to be cut, established interest needed to be convinced to cede control.  Most of that convincing, by the way, is not necessarily economically driven, and likely imposed top town, which would not have been imposed if Alipay continued as a foreign owned entity.  Was there a component of greedy management?  Sure.  But it's more complicated than that.  There is no other way to make that business successful.  It's not an opportunity that the Alibaba's foreign owners should have hoped to capitalize on.   In some ways, it's similar to why Paypal couldn't stay within Ebay, but more dramatically so, because owned within Alibaba, the business would not have been anywhere near this successful.

At this point, Ma Yun is a very wealthy man, and has become somewhat of a political figure.  The things he does is not driven by pure economic greed.  It's simply the rule of the game as long as you are playing on the Chinese playground.

Jurgis

  • Hero Member
  • *****
  • Posts: 4028
    • Porfolio
Re: TCEHY - Tencent
« Reply #12 on: November 03, 2017, 06:52:41 AM »
HJ, yeah, I think that's the ticket

At this point, Ma Yun is a very wealthy man, and has become somewhat of a political figure.  The things he does is not driven by pure economic greed.  It's simply the rule of the game as long as you are playing on the Chinese playground.
"Before you can be rich, you must be poor." - Nef Anyo

zhengmit

  • Newbie
  • *
  • Posts: 17
Re: TCEHY - Tencent
« Reply #13 on: November 08, 2017, 06:59:42 AM »
I am struggling a bit with this one without doing too much work: currently most of earnings came from gaming and transition from PC to mobile game is half way through.  Historically we haven't seen any company staying at top of the game forever.  The real growth opportunity is ad and payment.  However, digital ad is already 50-60% of total ad in China (US at 37% or so) and Tencent has 10% market share.  You can triple the ad revenue and market cap added is not significant.  Payment is probably not making money now but adding MA's market cap to Tencent is not getting a double in stock price.  However, they do have a lot of venture investment and security investment.  Any thoughts?

Liberty

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 10247
  • twitter.com/libertyRPF
    • twitter.com/libertyRPF
Re: TCEHY - Tencent
« Reply #14 on: November 08, 2017, 07:17:20 AM »
"Most haystacks don't even have a needle." |  I'm on Twitter  | Interesting podcast on sleep science

saltybit

  • Full Member
  • ***
  • Posts: 212

saltybit

  • Full Member
  • ***
  • Posts: 212
Re: TCEHY - Tencent
« Reply #16 on: November 15, 2017, 02:15:47 PM »
https://www.cnbc.com/2017/11/15/tecents-martin-lau-on-its-relationship-with-snap.html

Quote
Martin Lau, president of Tencent Holdings Ltd.
Chinese tech giant Tencent wants a closer relationship with Snap, the company's president said on its earnings call Wednesday.

"When we look at Snap's business we continue to feel there's a lot of engagement with the end users," president and executive director Martin Lau told analysts.

"That's why we have taken up more shares and tried to establish a closer relationship, and over time we're trying to see whether we can do something more strategic with them," he said.

plato1976

  • Hero Member
  • *****
  • Posts: 619
Re: TCEHY - Tencent
« Reply #17 on: November 15, 2017, 11:39:52 PM »
I am quite enthusiastic about these companies and agree with what you said.
The only thing I am wondering is how much upside they have (for both Tencent and Alibaba) from this place --- they are both at 470Billion market cap now...
(was easy for me to make a bet last year, but much harder now)

One of the best companies around with unique opportunity set in front of it.  BAT - which stands for Baidu, Alibaba and Tencent represent similar things as the FANG stock in the US does.  Except there's not much of competition from the traditional industries, so they BAT seem to venture into and dominate new markets with ease. 

Take payment, in the West, the banks would never have let IT companies control such a critical piece of the financial infrastructure.  When American Express came out, the banks banded together and came up with Visa and Master.  When Apple tried to get into payment, they ultimately decided to leverage the existing networks, rather than establish a new one.  In China, the banks and Unionpay are too bureaucratic and clueless with what's at stake.  They were busy fending off foreign competition by getting the government to set up barriers, meanwhile, Alipay and Tencent pay have very much taken over within a couple of years.  At this stage, Alibaba runs the biggest money market fund in the world, and Tencent and more so, Alipay own the foundational payment infrastructure, while the banks and Unionpy have no clue about what just happened.

Examples like this are countless.  QQ, the predecessor to WeChat was carved out of the telecom industry, because the telecom monopolies were trying to protect their own ability to charge people a lot of money just for texting. 

Innovative companies, protected from foreign competition, yet with a wide open space to dominate almost any domestic industry they choses to enter because the establishment companies don't know how to compete.  WeChat is so dominant in cell phones in China that Apple doesn't get its way when negotiating with Tencent on revenue share.  The stat owned enterprises, meanwhile just hide behind the regulatory walls and collect their rent rather than trying to compete for the future.

These companies are very much in a different league.  Risks are mostly political (like the FANG stocks face in the US today), rather than anything some other businesses can put up.  I don't know whether the Chinese government will allow these companies to continue taking large sections of industries in the fashion that they have been doing, but certainly on historical track record, or future prospects, these companies are probably as good as it gets on the Chinese playground. 

I happen to be biased against Baidu because of its business practices and its image in China is simply not as pristine as Alibaba and Tencent.  With those two though, the world is their oyster.

saltybit

  • Full Member
  • ***
  • Posts: 212
Re: TCEHY - Tencent
« Reply #18 on: November 21, 2017, 12:09:09 PM »
https://www.reuters.com/article/us-tencent-strategy/tencent-on-global-path-as-it-surpasses-facebook-in-valuation-idUSKBN1DK1S1

The stock has run up recently but I'm still quite bullish. Tencent has a lot more avenues for growth than any other tech company:
- WeChat is just starting to get monetized, there's a lot more growth left in them
- They're expanding WeChat and their games to neighboring countries (Malaysia in the article above)
- They're just starting to build out a platform for 3rd party companies http://technode.com/2017/11/21/the-tencent-economy-partners-building-their-businesses-via-tencents-open-platform/
- Their partnership with JD should also benefit them in the long-run, and even if JD/Tencent just maintains their current market share, China's ecommerce market still has a lot of room to grow.
- Their gaming franchise should remain strong. They have stakes in the top gaming companies in the US (Riot games, etc.)

What do folks think?
« Last Edit: November 21, 2017, 12:11:17 PM by saltybit »

ICUMD

  • Jr. Member
  • **
  • Posts: 60
Re: TCEHY - Tencent
« Reply #19 on: November 21, 2017, 12:18:46 PM »
I like this stock for all the reasons you mention - in my books, this is now entering an 'Infrastructure' stock designation - ie. now fundamentally entrenched with key services offered via its platform.  I think it will only grow from here and will be next to impossible to displace.  That is not to say that it will not be subject to volatility since it has a lofty valuation.  None the less, for a longer term horizon - it should see good gains.  It is my second largest holding having recently added it in the $45 range.  You may want to consider Naspers, which holds Tencent, but trades at a discount to its market value. 
FIH.U TCEHY, IFFNY, BRK.B