saltybit Posted August 16, 2017 Share Posted August 16, 2017 Recent post from John Huber about Tencent http://basehitinvesting.com/one-of-the-worlds-widest-moats/ Link to comment Share on other sites More sharing options...
NomadicRiley Posted August 23, 2017 Share Posted August 23, 2017 https://www.wsj.com/articles/chinas-aim-to-let-state-companies-raise-private-capital-hits-bump-1502973735?mg=prod/accounts-wsj Link to comment Share on other sites More sharing options...
saltybit Posted September 7, 2017 Author Share Posted September 7, 2017 http://technode.com/2017/09/07/tencent-music-kingdom/ Some highlights: - controls 75% of China's music market - In 2016, recorded music revenue in China grew 20.3 percent driven by a 30.6 percent growth in streaming alone, according to IFPI. - Turned a profit recently Link to comment Share on other sites More sharing options...
ICUMD Posted November 3, 2017 Share Posted November 3, 2017 Anyone else a fan of this stock? A little expensive, but seems to have fantastic growth opportunity ahead. Would love to discuss. Link to comment Share on other sites More sharing options...
clutch Posted November 3, 2017 Share Posted November 3, 2017 Hard to assess its moat or future as a foreigner. Link to comment Share on other sites More sharing options...
ICUMD Posted November 3, 2017 Share Posted November 3, 2017 Why? Naturally there are some risks - being a foreign stock in a communist country - similar to Alibaba. However, seems to have a fantastic entrenchment in the country - broad base of services ranging messaging, payments, gaming, search. Multiple ways of streaming profits from end users. Phenomenal growth rate. Not sure I understand the lack of interest. Link to comment Share on other sites More sharing options...
villainx Posted November 3, 2017 Share Posted November 3, 2017 All the moms and grandmas I've seen use WeChat, but I don't know what that translate to. For Facebook, mature adults using their networks have been view as a negative, but hasn't produced negative results thus far. As well, since the moms and grandmas are on WeChat, the corresponding kids have been on it as well. Obviously, they've been Chinese. But I heard the service has been fantastic. Uh ... I thus far refuse to be one of the corresponding kid. :P Link to comment Share on other sites More sharing options...
pau_ Posted November 3, 2017 Share Posted November 3, 2017 I've been really enjoying a youtube channel called Strange Parts. The host explores markets & tech. Notably, he makes what is essentially a refurb iPhone from parts he buys at a market in Shenzhen, and then later figures out how to add a headphone jack to an iPhone 7 by designing and printing a new pcb that hijacks the lightning port internally. One of the things you see in his videos is how everything runs off of personal WeChat accounts for coordinating business and making payments in the cell phone markets (including at at least moderate scale—coordinating work with factories) in Shenzhen. It's gotten me a bit interested as well. Though I have yet to do any real analysis. Here's a talk he gave on his projects at Noisebridge (hackerspace in SF), queued up to an explanation of the role of WeChat: Link to comment Share on other sites More sharing options...
ICUMD Posted November 3, 2017 Share Posted November 3, 2017 The integration that this company offers is remarkable. Really, its combining the products of large standalone American Internet companies into one offering. I can order a coffee and a cab from the same interface that I message and share photos, buy music and do online gaming. They also have their own online marketplace. It seems that they are now branching out into Hong Kong (if I understand correctly). I think its has amazing prospects given the Chinese population size and the wealth effect that is going on there. Likely stronger than any current NA company in the same space I would think. I don't know if Tencent will be able to expand past the Chinese borders as easily as the NA companies have done. However, I do think the Chinese government is supportive in making companies such as Tencent dominant players worldwide. Link to comment Share on other sites More sharing options...
HJ Posted November 3, 2017 Share Posted November 3, 2017 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. Link to comment Share on other sites More sharing options...
Jurgis Posted November 3, 2017 Share Posted November 3, 2017 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. Link to comment Share on other sites More sharing options...
HJ Posted November 3, 2017 Share Posted November 3, 2017 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. Link to comment Share on other sites More sharing options...
Jurgis Posted November 3, 2017 Share Posted November 3, 2017 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. Link to comment Share on other sites More sharing options...
zhengmit Posted November 8, 2017 Share Posted November 8, 2017 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? Link to comment Share on other sites More sharing options...
Liberty Posted November 8, 2017 Share Posted November 8, 2017 They bought a 12% (10% diluted) stake in SNAP: https://www.reuters.com/article/us-snap-tencent-stake/chinas-tencent-buys-12-percent-stake-in-snapchat-owner-idUSKBN1D81G3 Link to comment Share on other sites More sharing options...
saltybit Posted November 15, 2017 Author Share Posted November 15, 2017 https://www.cnbc.com/2017/11/15/chinas-tencent-earnings-blow-past-estimates-in-q3.html Great quarter.. Link to comment Share on other sites More sharing options...
saltybit Posted November 15, 2017 Author Share Posted November 15, 2017 https://www.cnbc.com/2017/11/15/tecents-martin-lau-on-its-relationship-with-snap.html 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. Link to comment Share on other sites More sharing options...
plato1976 Posted November 16, 2017 Share Posted November 16, 2017 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. Link to comment Share on other sites More sharing options...
saltybit Posted November 21, 2017 Author Share Posted November 21, 2017 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? Link to comment Share on other sites More sharing options...
ICUMD Posted November 21, 2017 Share Posted November 21, 2017 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. Link to comment Share on other sites More sharing options...
Liberty Posted November 27, 2017 Share Posted November 27, 2017 Interview with an early employee of Tencent who was first at Naspers and worked on the deal where they bought 47% of Tencent for 31 million dollars.. Interesting stuff: http://blog.ycombinator.com/tencents-chief-exploration-officer-david-wallerstein-on-wechat-qq-and-gaming/ Link to comment Share on other sites More sharing options...
Liberty Posted December 1, 2017 Share Posted December 1, 2017 https://www.reuters.com/article/us-spotify-tencent-holdings-stake-swap/tencent-music-spotify-in-talks-to-swap-stakes-wsj-idUSKBN1DV4HH Link to comment Share on other sites More sharing options...
Liberty Posted January 18, 2018 Share Posted January 18, 2018 https://www.lego.com/en-us/aboutus/news-room/2018/january/lego-group-and-tencent Link to comment Share on other sites More sharing options...
Liberty Posted January 19, 2018 Share Posted January 19, 2018 https://www.reuters.com/article/us-china-google-tencent/google-announces-patent-agreement-with-tencent-amid-china-push-idUSKBN1F80DF Link to comment Share on other sites More sharing options...
Jerry Capital Posted January 30, 2018 Share Posted January 30, 2018 Wanda sells $5.4bn stake in property unit to Tencent-led consortium "The involvement of Tencent and JD.com in the DWCP deal is another example of how private tech firms increasingly make investments that align with state objectives." https://www.ft.com/content/e79c2a42-04f8-11e8-9650-9c0ad2d7c5b5 Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now