Tencent Holdings Limited: Q4 2023 Review

About the Company

Founded in 1998, Tencent Holdings Limited is a technology conglomerate with a diverse portfolio including online entertainment, fintech and business services, advertising, media, education, and healthcare. In the online entertainment sector, Tencent develops and publishes games, operates social networks, and provides streaming video and music services. The fintech and business services division offers online banking, insurance, and payment services. The advertising division manages placements across social networks, games, and websites.

Management

As of the end of 2023, Tencent’s management includes:

• Ma Huateng (Pony Ma) – Chairman and CEO
• Liu Chiping (Martin Lau) – President
• John Long – CFO

Stock Performance

Tencent’s shares trade on the Hong Kong Stock Exchange under the ticker symbol 700 and are included in the Hang Seng Index. As of December 31, 2023, the total shares outstanding were 9,482,992,820. During Q4 2023, the stock traded in a range of 263.60 HKD to 332.60 HKD. The opening price on October 3, 2023, was 302.00 HKD, and the closing price on December 29, 2023, was 293.60 HKD.

Financial Results

In Q4 2023, Tencent’s net revenue was 155,196 million RMB, a 7.07% increase from 144,954 million RMB in Q4 2022, and a 0.37% increase from 154,625 million RMB in Q3 2023.

Revenue Breakdown for Q4 2023

• Value-added services: 44.51% (69,079 million RMB)
• Fintech and business services: 35.04% (54,379 million RMB)
• Online advertising: 19.20% (29,794 million RMB)
• Other: 1.25% (1,944 million RMB)

Financial Position

As of December 31, 2023, Tencent’s total equity was 873,681 million RMB, an 11.60% increase from 782,860 million RMB on December 31, 2022. Total assets were 1,577,246 million RMB, and total liabilities were 703,565 million RMB.

Achievements

In Q4 2023, Tencent achieved significant milestones:

1. Revenue Growth: The company’s total revenue increased by 7.07% year-over-year, driven by higher revenues from advertising and mobile games.
2. Gaming Sector: New game releases and updates attracted a significant number of new users, boosting revenue in this segment.
3. AI Investments: Tencent continues to develop artificial intelligence technologies, integrating them into its products and services.
4. Environmental Initiatives: The company announced a new plan to reduce carbon emissions and implement environmentally friendly technologies in its operations.
5. Social Responsibility: Tencent supports various social initiatives, including educational programs and public health projects.

New Launch: Dungeon & Fighter Mobile (DnF Mobile)

Tencent’s newly launched Dungeon & Fighter Mobile (DnF Mobile) game has made a remarkable impact in the market. Launched on May 21, 2024, the game soared to the top of China’s iOS charts, generating over $270 million within the first 30 days. Created by Nexon Co., DnF Mobile became Tencent’s largest release of the year. According to industry tracker Sensor Tower, the game ranked first in both downloads and revenue on iOS in China. The game’s success contributed to a 12% boost in Tencent’s mobile game revenue for the month, and its early earnings surpassed the combined revenue of Tencent’s other top titles, Honor of Kings and PUBG Mobile, indicating a strong market response.

Future Outlook

Tencent’s management expects continued revenue growth in 2024 through the expansion of its gaming portfolio, the implementation of new technologies, and strengthening its presence in international markets. The company also plans to increase investments in research and development in artificial intelligence and environmentally friendly technologies.

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