Tencent - a Chinese company that acquires...30 Aug 2019 11:38
This is a massive company who see advertising revenue as very important and is the sort of business could acquire bids
Tencent is the world's largest gaming company.
The company has particularly strong positions in e-sports, both in China and overseas. E-sports is an extremely rapidly growing sector. The company has also expanded very rapidly with its NBA franchise through Tencent Sports. A startling 490 million people watched NBA online via Tencent platforms in the past year.
Tencent has a 40% stake in two leading and profitable Chinese video game streaming companies who are also expanding overseas. DouYu (DOYU) recently reported net revenue up 133% in its latest quarter. HUYA (HUYA) recently reported net revenue up 83.6% in its latest quarter. There are indications that Tencent's founder Pony Ma wants the two companies to merge, even though they both only recently listed on U.S. exchanges. Such strength in a fast-growing sector is an indication of the strength of Tencent as a whole.
Tencent's overseas gaming push is evidenced by their tie-ups with numerous gaming companies. These are only partly to promote gaming business in China. They are looking to promote the gaming business in Asia and further afield.
Such investments are also strategic stakes whose value tends to be under-represented when analysts look at bottom line profitability for the company.
Some examples of recent tie-ups are as follows:
* A strategic alliance with Square Enix, makers of "Final Fantasy" and "Tomb Raider."
* A 40% stake in Epic Games, maker of the worldwide blockbuster "Fortnite".
* 5% of French games maker Ubisoft (OTCPK:UBSFY).
* 5% of gaming giant Activision Blizzard (ATVI).
* A majority stake in Supercell, maker of "Clash of Clans".
* A wide-ranging partnership with Take-Two Interactive Software (TTWO).
* A US$150 million investment in American social news and discussion player Reddit.
* An investment in American social media app Snap (SNAP).
* An investment in Brazilian fintech outfit Nubank.
* An investment in Indian fintech outfit NiYO.
The core markets that Tencent plays in today, such as advertising and gaming, have long runways ahead of them. The digital advertising market in China is expected to grow in excess of 70% over the next 5 years, with Tencent being a significant beneficiary.