TENCENT STOCK ANALYSIS - VALUATION RANGE - BUY AND SELL STRATEGY

Are these growth percentage numbers coming from revenue or earnings estimates? If managed effectively, earnings should increase faster than revenue due to relative shrinking of fixed cost and added economies of scale.

I own Tencent solely for the gaming business. Gaming will only get bigger and bigger as time goes on. This is a buy and hold for me

Excellent as usual

One interesting fact, Tencent has been buying back its stock for 13 consecutive days (or something like that). Sign of confidence? I like Tencent and have confidence in its management, but it is known for its very bad customer service for its to-customer business and its to-business business is not as competitive as Alibaba. Plus Tencent invests more akin to a PE or VC firm rather than Baba, who tends to take over the acquisition target and operate it as a whole. Anyways, interesting business and the moat is really really strong for Tencent.

Thanks, Sven. I am no expert, but I used discounted free cash flows to come up with PV, although idk if I discounted by the correct rate. Their free cash flow (and probably EPS as well) has been exponentially growing. It seems like it all simply depends on whether or not that exponential growth continues or if it becomes linear and slows. If it continues then this current price will be seen retrospectively as a great bargain. Wish I had a crystal ball.

Great video!

I want to buy Tencent at $25-28....waiting......

Thanks Sven. Quick Question: How come you do not discount the earnings (earned in 2019, 2020, 2021 etc,) in your intrinsic value calculation???

Looking at PE with past years earning especially for a growth company like Tencent is misleading....isn't it?

Top video Sven, brilliant example of needing different scenarios when pricing stock. The only thing I do differently is I would use China GDP in a recession (say 3.5 - 4% growth )and use that. This is a lot more conservative. But hey, you say potatoe I say patatoe. Point is conservative on the down side.

I am so bullish that I got in an 3XETF that include Tencent & BIDU. I've been adding when it drops. Its now down 25%. This earnings period coming is going to be one hell of a ride UP or DOWN. But how much DOWN could it be... right?

Was one of my largest positions - trump made me sell it. A pity.

Terrific video Sven... Thank you! Always appreciate your detailed analysis showing different growth scenarios. I totally agree that Tencent will continue to grow, but the growth won't be linear over the next decade. I just cannot see going another 10 years without a recession thrown in at some point.

I know you're not a fan of the ETF route, but I'm currently getting the majority of my Chinese exposure thru KWEB and SCHE. I believe the China market is too important to exit altogether, so that's my way of having exposure as I wait for a larger margin of safety in a select group of individual equities I'm interested in.

Full disclosure - I currently own CHL (China Mobile), which is my only individual equity in China right now.

Is there any chance of you doing a video on the UK market, or are you waiting until after Brexit when prices drop?

What is the reason you use 15% to discount? Thanks!

good job i was watching buffett recently talk about this he said analyst who use high growth rates n low discount rates pretty much expect infinity which he exclaimed as quite dangerous as u said if gdp doesnt grow or something messes up that growth then thats another question. really interesting how they still think like this.

Personally I think tencent is a bit overvalued but would love to pick up shares if the price drops significantly.

are you thinking of making your videos podcast available ?
more options
more listeners
bigger audience
revenue
etc
your videos are mostly listenable content even without visuals

most of your viewers will subscribe to podcasts that use podcasts
i tunes

thanks
jb canada

Has anyone ever tried evaluating the sum of it's parts individually? This thing is like Facebook + All the gaming companies + Venture capital. The gaming is not slowing down, it's just being regulated by the Chinese government, which one could argue is a positive thing. Once the governments began regulating cigarettes only 4 players survived, and they were the best performing stocks during 1970-2015.


I've dived face first into TCEHY and BABA recently, trying to predict an absolute bottom is impossible. I'm satisfied with the idea of owning terrific companies at good/neutral prices. Of course $30 would be amazing, and $25 even better. But I'll be fully invested before it ever reaches $25.

remove the "k" sound from x then you are spot on haha.

Hi Sven, what do you think about Xiaomi?

Hi, can you explain the discount of buying Tencent through Naspers. Very interesting case I think...

I looked into Tencent recently for a subscriber & we are pretty much on the same page. If you're going to invest with a 50% margin of safety you'd have to assume a growth rate of about 55% per year, or you'd have to assume a higher 2023 PE such as 30-40.

Either way I think it still looks overvalued at the current price, if you want to invest in Chinese tech stocks then there are many more attractive ones out there at the moment!

Can you do a review of IQ?

True. The tech bubble in CHina is bursting. Would I jump in to buy now? No

(Stock around $37 as I write this, down 8% over the last week). I'm kind of at a point where I think viewing Tencent as overpriced now is kind of like viewing Amazon as overpriced at the height of the tech bubble in the early 2000's- while it might be technically true, I'm thinking that the market capitalization in say 10 years based on new streams of income is what people need to keep in mind when they're looking at it. The quality of the management and the loyalty among consumers and the brand value are strongly worth considering when you're looking into the price of this company (compare that to Elon Musk's recent spats with the SEC . . or Facebook and Cambridge Analytica). As John Templeton said, "buy when there's blood in the streets".

35$ already

I believe the EPS for Tencent was around $1.2 for 2017

One thing I don't fully understand is why you use 30% for the anticipated EPS growth rate but just 15% for the stock price growth rate. What makes you assuming the 15%?
Thank you.

While you are on chinese stocks, can you do one that is related to the chinese economy WYNN? It's taken a beating and another financial channel says it is a value for the long term if it falls below 100$. It's around 95$ right now i believe

Some other Chinese names worth analyzing might be IQ / PDD / BZUN / HUYA.

E-sport is going to be a huge part in China because the culture

do you still think tencent is worth to hold it?

I started buying in 2018 when it fell from 60 to 39. That was my buy point. Bought more as it went down to 33. And bought more as it went up. I am up about 22% since I started buying.

What do you think about BZUN these days? A buy in your opinion? Undervalued?

I notice in your Chinese stock analyses, you simply use the present value formula to get your intrinsic value.

But in other videos like your Facebook analysis, you add all present values to get your net present value. What's the difference and why do you switch between the two?

Thanks for the lesson, trying it out myself. So at today's EPS of 1.36 and a price of 43.55 it would have to grow by 25% year on year to deliver a 15% return by 2024 (in other words, double its value in 5 years).

Totally lost me with the accent. Then you are throwing out possible future valuations and lots of what ifs. That's not an analysis, that's a game of what if, and if you're doing that you can manipulate anything to look good or bad

time to review Tencent again.

am surprised how right you were about this stock, in a sense that all risks involved growth ratios and potential disruptions like recession even the stock being virtually overvalued when we all were super optimistic about it could bring it down. now kits a bargain and doesnt look as attractive anymore. Just pure Genius to say the list.


However I have a question Sven, please in your next video include an answer in few seconds or if it needs a bit of background do a video for us. STOCK SPLITS??? I HEARD ALIBABA WANTS TO SPLIT INCREASE THEIR SHARES BY FACTOR OF 4 IN TWO MONTHS TIME AT MAX. COCA-COLA GOOGLE TO NAME A FEW, DID THIS AND IT WORKED OUT WELL FOR THEM. WARREN BUFFET (BERKSHIRE HATHAWAY) ON THE OTHER HAND REFUSES TO SPLIT AND YOU RESEMBLE HIS INVESTMENT STYLE SO MUCH HE SPEAKS THE THINGS YOU SAY IN YOUR FREE VIDEOS. IS IT A GOOD THING? WHAT ARE THE RISKS? BETTER TO BUY BEFORE SPLIT INCREASE OR SELL BEFORE STOCK MERGE? PLEASE HELP US OUT PROF AS YOU USUALLY DO.

Thank you for this! Can you tell me which online exchange can a Canadian use to buy Tencent?

Palese do another tencent analysis

It's incredible watching this 2 years later Sven...not only did you get the valuation and price prediction spot-on, your forecasted crisis in early 2020 finally proved you are psychic 😂😂😂

Hi Sven, could you kindly do another Tencent analysis please! Thank you! ☺️

TCEHY: $77.20 USD @ close yesterday. Amazing call by Dr. Carlin!

I think morningstar used a lower than 15% discount rate

2018 and Baba was undervalued at $156... Such a bargain

Ok I buy