Andrew Willis: Of all the potential outcomes for a Chinese technology giant under regulatory pressure, Tencent (TCEHY)’s current price suggests something that doesn’t seem to reflect the company’s sum-of-parts.
Investors are expecting regulatory issues to affect both video game and fintech businesses. But it’s is in the face of multiple growth drivers, from rapid overseas expansion in the video game space to double-digit annual ad growth, to an investment portfolio that generates an estimated 20% annual, to fintech revenue, which senior equity analyst Ivan Su estimates will hit a whopping 26% annual compound growth.
With such large market potential, signs of a stabilizing regulatory environment, and a stock price that doesn’t seem to have recovered yet, perhaps it’s worth focusing on the strengthsthat got all this attention in the first place.
For Morningstar, I’m Andrew Willis.