|Bid||15.53 x 4000|
|Ask||15.53 x 2900|
|Day's Range||15.47 - 15.90|
|52 Week Range||12.04 - 32.25|
|Beta (5Y Monthly)||1.04|
|PE Ratio (TTM)||39.57|
|Earnings Date||Aug. 09, 2021 - Aug. 13, 2021|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||23.32|
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...
(Bloomberg) -- Chinese gaming giant NetEase Inc.’s music streaming arm has filed for an initial public offering in Hong Kong as the Tencent Holdings Ltd. rival ratchets up competition in online content.The Hangzhou-based firm has submitted a listing application for Cloud Village Inc. to the Hong Kong stock exchange, according to a filing on Wednesday. Cloud Village runs NetEase’s music streaming platform in China and also operates streaming and advertising through the platform. The filing didn’t provide details of the share sale.An IPO of the music unit could raise about $1 billion, according to a person familiar with the matter, who asked not to be identified as the information is private. Jiemian and IFR reported the size of the offering earlier on Wednesday. A representative for NetEase declined to comment.China International Capital Corp., Credit Suisse Group AG and Bank of America Corp. are the sponsors of the deal, according to the filing.NetEase has long been a distant runner-up to Tencent in gaming and music streaming. Started in 2013, the music wing has since expanded its products to offer everything from online karaoke to live-streaming and lyrics sharing. The unit -- 62% owned by NetEase -- grew its monthly music users to 181 million last year, of which 9% are paying subscribers, according to its preliminary prospectus. Revenue surged 111% to 4.9 billion yuan ($767 million) in 2020, with social entertainment services making up a bigger share compared with previous years. Net loss widened to 3 billion yuan last year, versus 2 billion yuan in 2019.Unlike its much larger rival, NetEase’s music arm is still in the red largely because of high content costs -- almost as big as its 2020 sales. But William Ding’s company recently struck deals to license songs directly from Universal Music Group Inc. and Sony Music Entertainment, ending the label giants’ exclusive arrangements with Tencent Music Entertainment Group. China’s antitrust authority had launched a probe into Tencent’s music spin-off over its licensing practices. Tencent Music has been cooperating with the regulators as it has received increased scrutiny, Chief Strategy Officer Tony Yip said in a post-earnings call last week.Read more: NetEase-Sony Deal Is Newest Blow to Tencent’s Grip on Music (1)In 2019, NetEase Cloud Music unit raised $700 million from Alibaba Group Holding Ltd. and founder Jack Ma’s Yunfeng Capital, following a previous round in which Baidu Inc., General Atlantic and Boyu Capital participated. The company said it plans to invest more in tech, build up its user base, and diversify its revenue stream in the next three years.(Updates with details from the prospectus starting from the fifth paragraph)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Tencent Holdings Ltd. is setting out to prove it’s best placed to weather a storm of antitrust scrutiny that’s wiped about $200 billion off the value of China’s largest company in a span of months.Its results on Thursday should affirm the resilience of the world’s largest game-publishing business as the pandemic recedes, now buttressed by growth in newer arenas such as fintech and the cloud. Yet it’s struggled to claw back the market capitalization it’s shed since its January peak, right around the time Beijing began a clampdown on Jack Ma’s Alibaba Group Holding Ltd. and Ant Group Co. before moving on to rising star Meituan.Tencent has largely escaped the hostilities for now -- despite its ubiquitous WeChat app offering unrivaled insights into virtually every facet of Chinese life and an overwhelming share of the gaming, music and social media markets. But questions remain over eventual fallout from a campaign that’s aimed at curtailing the influence of China’s internet companies and, much as in the West, exposing alleged abuses of their power.A good set of results should go a long way toward assuaging investors. The Shenzhen-based company is expected to deliver 24% revenue growth for the March quarter thanks to a strong payments and cloud services recovery, while gaming and other content continue to hook users. Nearly 96% of analysts tracking the stock on Bloomberg gave it a buy rating or equivalent, the highest ratio since Beijing kicked off its antitrust campaign in November. Its shares erased gains of as much as 1.3% to trade little changed Thursday.“If there is no regulatory concern, Tencent is very attractive in terms of valuation,” said Julia Pan, a Shanghai-based analyst at UOB Kay Hian. “It’s a defensive play within the tech sector, since they don’t need to burn cash for their core businesses like Alibaba and Meituan.”Here are a few things to watch when Tencent reports earnings after the bell in Hong Kong.The Elephant in the RoomWhile Xi Jinping’s government has yet to single out Tencent in its antitrust drive, investors haven’t fully dismissed potential fallout for Pony Ma’s sprawling online empire.Rivals like TikTok-owner ByteDance Ltd. argue WeChat is locking users inside its ecosystem by blocking links to external services. Tencent portfolio companies like Shixianghui and Yuanfudao have been penalized for unfair price tactics and other anti-competitive behaviors. Its music spinoff faces heightened scrutiny over exclusive dealings with record labels. And perhaps most alarmingly, Tencent’s fintech arm -- the closest analog to Ant in China -- is said to be next in line for increased supervision.Executives will likely again seek to reassure investors. The company has always been cautious with fintech regulations and will stick with its normal practice of acquiring minority stakes in startups. “Compliance is our lifeline,” Tencent President Martin Lau told investors in March.But Beijing’s scrutiny may yet show up in Tencent’s bottom line. Ad sales could take a hit if online tutoring startups -- major marketers in China -- decide to dial it down to stay on Beijing’s good side. A prudent approach to fintech could also mean growth shifts to vanilla payments rather than the more lucrative businesses of wealth management and lending. For now, Tencent’s fintech and cloud business is expected to grow 41% in the March quarter -- the fastest in eight quarters -- from a low base a year ago when Covid-19 emerged.That Evergreen Cash CowWhen China went into lockdown at the start of 2020, online games became one of the biggest beneficiaries of a stay-at-home entertainment boom. That’s why this time around, Tencent faces a tough comparison for year-over-year growth: a slower 16% sales increase projected for its bread-and-butter business. Still, mainstay games like Honor of Kings and PUBG Mobile are topping the charts for global player spending, despite formidable challengers like miHoYo’s Genshin Impact.Tencent announced a pipeline of more than 40 new titles during its annual games showcase on Sunday. After a year of carving out slices of at least 31 gaming firms around the world, it’s now trying to churn out new mobile hits based on familiar content including Japanese manga series One Piece and Digimon.“Tencent continues to face strong competition from large tech companies such as ByteDance and Alibaba, as well as medium-sized firms such as Lilith Games and miHoYo but is in no immediate danger of losing its market leading position,” game research firm Niko Partners wrote in a May 16 note.Horse RacesLonger term, investors should also pay attention to the competition.Tencent is famous for its unforgiving culture of internal competition -- often likened to a horse race because of its swift and exacting nature -- where rival teams compete to develop similar products until one wins out. But it’s finally breaking down some internal walls, so as to better fight externally.The social giant last month folded its mini-video app, video streaming platform and mobile store into a single business unit in a rare restructure. Ross Liang, the former head of the QQ social app, took over as new chief executive of Tencent Music Entertainment Group, a year after a similar leadership reshuffle at its literature arm.All of this highlights Tencent’s effort to pull together resources to build a Walt Disney Co.-style franchise and recover lost ground from rivals like ByteDance, whose addictive apps have been chipping away at user screen time and advertising dollars. For one, creators on Tencent’s music apps will share short clips on WeChat’s fast-growing video accounts as in-house platforms work more closely together, Liang said in a post-earnings call on Tuesday.Competition is also fierce in cloud services. The pandemic disrupted IT projects but the pace should have picked up last quarter as the world’s No. 2 economy rebounded. Tencent will be keen to make up lost ground in 2021. Huawei Technologies Co. overtook Tencent last year to become China’s No. 2 cloud infrastructure provider, with a market share of 16.3% versus Alibaba’s 35.1%, according to Gartner research.(Updates with shares in fourth paragraph)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.