2024-03-24 12:09:25 ET
Summary
- Tencent's Q4 revenue slightly missed expectations, but profits surged 23% YoY, beating consensus.
- Tencent announced a $12.8 billion stock buyback program and a 40% increase in dividend payments, boosting shareholder distributions.
- Personally, I see the ramp up in distributions as a major bull signal, as I have previously voiced negative commentary on Tencent's "unappealing shareholder distributions"
- In my opinion, with an equity yield that could top 5% in 2024, Tencent clears a major hurdle for investors to consider the Chinese tech giant "investable".
- I upgrade Tencent stock to a "Buy" recommendation, estimating an intrinsic value of around $49 per share.
Tencent (TCEHY) shares traded up 1.5-2.0% after the Chinese tech giant reported Q4 and FY 2023 results. Although revenue came in somewhat lower than expected, profits surged 23% YoY, comfortably beating consensus. In addition, Tencent surprised markets positively by revealing a $12.8 billion stock buyback program (expected to be up 100% YoY), as well as a 40% jump in dividend payments. Personally, I see the ramp up in distributions as a major bull signal, as I have previously voiced negative commentary on Tencent's " unappealing shareholder distributions, which certainly are below levels that would justify investing in such a risky equity asset". Considering updated valuation metrics, most notably a lower risk requirement for the equity, I now estimate the intrinsic value of Tencent to be around $49 per share. I upgrade the stock to a "Buy" recommendation....
Read the full article on Seeking Alpha
For further details see:
Buy Tencent: The Buybacks Are Here