Tencent's Positive Market Outlook and Focus on Disruptive Applications
2023-07-30
Tencent Holdings Limited recently held a call meeting where analysts and company executives discussed the company's financial results and provided updates on their business operations. The meeting focused on the revenue composition and growth trends of Tencent's various properties, with particular emphasis on Weixin (WeChat) and its different features such as Moments, Mini programs, official accounts, and video accounts.
During the meeting, the potential disruption and growth in applications and user-to-machine interactions within the industry emerged as a significant topic of discussion. Analysts and executives explored the impact of these disruptive applications on the industry landscape and the potential challenges they may pose to established players. They highlighted the importance of regulation in fostering innovation and growth, and discussed the government's supportive stance towards regulation in the industry.
The availability of chips was also addressed during the meeting, with assurances that chips will be largely available despite potential short-term shortages. The implications of chip shortages on the development and adoption of disruptive applications were assessed, and alternative solutions and strategies were explored to mitigate their impact on operations.
Looking at the company's market outlook, Tencent expressed positivity, particularly in China where there is a broad-based consumption upturn across various sectors. While fluctuations in demand for high-ticket items may occur, companies in these categories are actively advertising to drive sales on Tencent's platform. The company expects further improvement in advertising revenue for the rest of 2023. Additionally, the presence of multiple AI and foundation models in the market is anticipated.
The key drivers of Tencent's business were identified as the recovery and growth of the game business, emerging growth drivers such as video accounts advertising monetization and e-commerce livestreaming monetization, cost discipline and efficiency, and a focus on user experience. The company's plans for product and service expansion revolve around gradual growth, risk management, and investment in AI and foundation models. Tencent aims to grow its financial products while ensuring high-quality risk management. They also plan to develop their own foundation model to support their use cases and offer it to the market on both a consumer and business basis.
Overall, the call meeting provided valuable insights into Tencent's financial performance and future prospects. The company's positive market outlook, focus on disruptive applications, and commitment to innovation and user experience position Tencent for continued growth and success in the industry.
The participants of the earnings call included prominent figures from Tencent Holdings Limited, such as Wendy Huang, Pony Ma (Chairman and Chief Executive Officer), Martin Lau (President), James Mitchell (Chief Strategy Officer), and John Lo (Chief Financial Officer), as well as analysts from leading financial institutions. Their discussions shed light on Tencent's game business performance, highlighting the success of "evergreen games" such as Honour of Kings, League of Legends, CrossFire, CrossFire Mobile, Peacekeeper Elite, PUBG Mobile, and Arena Breakout. These team-based competitive games have remained popular and balanced over time, with appealing content and virtual outfits tied to specific events or holidays driving their strong performance. The impact of COVID-19 on user behavior was also addressed, with no significant changes noted.
In conclusion, Tencent's call meeting provided a comprehensive overview of the company's financial results and future plans. The discussions surrounding disruptive applications, regulation, chip availability, and market outlook showcased Tencent's commitment to innovation and growth in the industry. With a focus on user experience and a strong game business, Tencent is well-positioned to capitalize on emerging opportunities and drive continued success.