Tencent, China’s most valuable publicly traded company

Tencent Holdings Limited is a Chinese multinational conglomerate and holding company with its global headquarters based in Shenzhen, and offices across Asia, including Tokyo and Seoul, Europe, including Amsterdam, Berlin, Istanbul, London, and Paris, North America, including Palo Alto, Los Angeles, New York, and Toronto, and the Middle East and Africa, including Cairo and Dubai. The company was originally founded by Pony Ma, Zhang Zhidong, Xu Chenye, Charles Chen and Zeng Liqing in November 1998 as Tencent Inc in the Cayman Islands.

It is one of the world’s highest grossing multimedia companies in terms of revenue and market capitalisation (approximately US$438 billion), and the biggest enterprise in the video game sector worldwide by equity investment.

Key Tencent business segments

According to the company, connecting people is at the core of what they do. This has resulted in the development and provision of a wide range of easy to use instant messaging and social networks, including Weixin/WeChat, QQ, and Qzone.

This extends to Tencent’s integrated social entertainment offerings, driven by the next generation of social and content integration through cross-screen, multi-platform and multi-format models. The company’s current digital content products include online games, video, live streaming, news, music and literature.

Major Tencent brands include Tencent Games, Tencent Video, Tencent Pictures, WeiShi, Tencent Sports, Tencent News, Tencent Animation and Comics, Tencent Music Entertainment Group, Yuewen and Tencent Esports.

Tencent Marketing Solution is the leading big data marketing platform in China, providing integrated digital marketing solutions that work to build a stronger connection between brands and users through effective marketing. The solutions integrate deep business insights, marketing technologies and professional services across the company’s applications.

Furthermore, Tencent Cloud provides cutting-edge cloud products and services to companies worldwide by leveraging its global data center infrastructure, integrating cloud computing, big data analytics, AI, Internet of Things, security and other technologies, with smart enterprises. It provides these services to a wide range of industries including financial services, education, healthcare, retail, industry, transport, energy and radio & television.

How does Tencent generate its money?

Tencent is one of the biggest companies in social media, venture capital, and investment sectors, offering a wide range of services, including social networks, music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games.

Tencent operates the instant messengers Tencent QQ and WeChat, as well as a news website. In 2018, the company achieved a market value exceeding US$500 billion, making it the first Asian tech company to reach this milestone.

Tencent holds the top spot as the most valuable publicly traded company in China. According to Forbes, in 2024, the company has generated $86.2 billion in revenue, holds assets valued at $227.8 billion, and has achieved profits of $18.3 billion. It also ranks #38 in Forbes’ Global 2000 (2024) and #183 in the World’s Best Employers (2023).

Notable Tencent developments and initiatives

In April 2024, MoneyGram International, Inc., (“MoneyGram”), a leading global financial technology company that connects the world’s communities, and Tencent Financial Technology, the fintech division of Tencent, announced a new partnership today.

The partnership enables consumers to send funds through MoneyGram Online, MoneyGram’s leading direct-to-consumer website and app, directly to recipients’ Weixin Pay wallet, a leading payment and digital wallet service in China.

In November 2023, Tencent announced its partnership with the Chinese Academy of Agricultural Sciences (CAAS) to create a Digital Seed Bank at the Tencent Science and Technology Museum. The Digital Seed Bank will feature three-dimensional digital displays of hundreds of types of germplasm resources now preserved at the National Crop Genebank of China (NCGC), the world’s largest single national-class germplasm resource bank. Exhibitions will also include China’s world-class seed-storage and breeding technologies, as well as a view of the whole plant growth cycle. The charitable effort is designed to support agricultural research while providing easy access for the public to learn about agricultural science.

In April 2023, Weixin Pay, a service under Tencent, entered into a 3-year agreement with the Singapore Tourism Board (STB) to enhance the travel experience for Chinese tourists by introducing smarter and more convenient solutions. This entails Singaporean merchants utilising the Weixin payment system to streamline transactions with Chinese tourists, and the creation of new channels on the platform to boost Singapore’s tourism industry.

In December 2022, the launch of TanLIVE, a new platform by Tencent aimed to connect various stakeholders involved in low-carbon technologies to expedite the adoption of climate solutions. These stakeholders encompass entrepreneurs, investors, and research institutions.

2024 1st quarter results

Tencent reported total revenues of RMB159.5 billion (USD22.5 billion) in the first quarter of 2024, a 6% increase year-over-year (YoY). Gross profit rose by 23% YoY to RMB83.9 billion (USD11.8 billion).

On a non-IFRS basis, operating profit increased by 30% YoY to RMB58.6 billion (USD8.3 billion) with an operating margin of 37%, and profit for the period surged by 54% YoY to RMB51.3 billion (USD7.2 billion), with a net margin of 32% (up from 22% last year). Profit attributable to equity holders rose by 54% YoY to RMB50.3 billion (USD7.1 billion), with basic and diluted earnings per share at RMB5.375 and RMB5.263, respectively.

On an IFRS basis, operating profit grew by 38% YoY to RMB52.6 billion (USD7.4 billion), with an operating margin of 33%, and profit for the period increased by 62% YoY to RMB42.7 billion (USD6.0 billion), with a net margin of 27% (up from 18% last year). Profit attributable to equity holders climbed by 62% YoY to RMB41.9 billion (USD5.9 billion), with basic and diluted earnings per share at RMB4.479 and RMB4.386, respectively.

Total cash stood at RMB445.2 billion (USD62.8 billion) with free cash flow at RMB51.9 billion (USD7.3 billion), up 0.4% YoY. The net cash position was RMB92.5 billion (USD13.0 billion).

The fair value of shareholdings in listed investee companies (excluding subsidiaries) was RMB522.4 billion (USD73.6 billion), and the carrying book value of unlisted investee companies was RMB328.8 billion (USD46.3 billion).

Tencent repurchased approximately 51.0 million shares on the Hong Kong Stock Exchange for around HKD14.8 billion during the quarter.

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