The Tencent Group's annual meeting was held on the afternoon of January 13, 2025, in Shenzhen. In his speech at the meeting, Tencent's Chairman and CEO, Ma Huateng, discussed several key points, including focusing on core businesses, rejuvenating old businesses, and reducing costs while increasing efficiency.

Reflecting on Tencent's performance over the past year, Ma Huateng believes that the company has done well in terms of cost reduction and efficiency improvement. He also noted that there was some pressure in the second half of 2024, but the new quarter that began after October showed signs of improvement.

In addition, Ma Huateng specifically mentioned WeChat's approach to e-commerce, stating that WeChat aims to spend a long time developing its e-commerce ecosystem connector. Regarding the recent "gift-giving" feature launched in WeChat's small stores, which some have dubbed the "WeChat Blue Envelope" and compared it to WeChat Red Envelopes, Ma Huateng emphasized that he hopes the public will not overly hype this feature. He explained that WeChat plans to spend five years or even longer to create an e-commerce ecosystem connector, leveraging the power of social connections. He stressed that the process should focus on quality and careful crafting, aiming to produce a premium product.

At the end of last year, WeChat began gray-testing the gift-giving feature, marking a significant move by Tencent to re-enter the e-commerce market.

Users can tap "Send to Friends" to open the "Confirm Gift" page, choose a style, browse the price, select friends, and complete the payment. The gift is then automatically sent. The recipient fills in the delivery address and, before receiving the gift, can choose to replace it with another style of the same price. This new gift-giving format has been humorously referred to as the "Blue Envelope" by netizens, in reference to the WeChat Red Envelope.

Regarding WXG (WeChat Business Group), Ma Huateng noted that the key feature of WeChat's video accounts is socializing with acquaintances, with a current focus on middle-aged and older audiences. However, it needs to reach younger users and expand further into the younger demographics.

In terms of IEG (Interactive Entertainment Group), Ma Huateng changed his previous critical stance and expressed that both domestic and international businesses have grown over the past year. The company’s overseas investments and studios have performed well, with a significant proportion of gaming business now coming from international markets.

As for the booming short drama market, Ma Huateng stated that Tencent does not produce low-quality short dramas but is investing in high-quality ones.

Is Tencent Stock Worth Investing In?

Tencent Holdings (00700.HK), as a leading enterprise in China's internet industry, maintains a central position in the market with its strong social network and diversified business portfolio. Whether it's WeChat's widespread adoption or its global leadership in gaming, Tencent continues to push the industry's limits.

Strong Moat, Diversified and Steady Business

Tencent's core business spans across several sectors, including social networking, gaming, fintech, and enterprise services. WeChat and WeChat's monthly active users have surpassed 1.3 billion, covering nearly all of China's internet users. This enormous user base not only provides Tencent with stable advertising revenue but also offers strong traffic support for its emerging businesses in fintech, e-commerce, and more.

In the gaming sector, Tencent is one of the largest gaming companies globally, with several phenomenon-level games like Honor of Kings and Peacekeeper Elite under its belt. According to the latest financial report, Tencent's gaming revenue grew 12% year-on-year in the first half of 2024, accounting for more than 30% of total revenue. Additionally, Tencent's investments in emerging businesses like video accounts and mini-programs are beginning to pay off, especially with the rapid growth of video account advertising revenue, which has become a new profit growth point for the company.

From an industry standpoint, Tencent ranks first in market value in the internet media industry, with a market capitalization of HK$3.82 trillion. Its market share is leading in several sub-sectors, especially in social networking and gaming, where it has almost monopolistic advantages.

Stock Price Retracement, but Long-Term Trend Remains Positive

From a technical perspective, Tencent's stock price closed at HK$409.4 on January 6, 2025, marking a slight pullback of 1.16% from recent highs. However, looking at historical data, Tencent’s stock price has shown a clear upward trend over the past decade, with an annualized compound growth rate exceeding 20%. The current stock price is at the median level in its history, with a price-to-earnings ratio of around 20 times, still offering a high cost-performance ratio compared to the industry average.

From a technical indicator perspective, Tencent’s stock price has formed strong support around HK$350, limiting short-term downside. As market sentiment improves and the company's fundamentals continue to strengthen, the stock price is expected to return to an upward trend.

Comprehensive Judgment: Promising Future

Considering both the company's fundamentals and technical stock analysis, we believe that Tencent's long-term investment value remains significant. Firstly, the company has a strong moat in its core businesses, and the monetization potential of the WeChat ecosystem is yet to be fully realized, with huge growth potential remaining. Secondly, Tencent’s investments in cutting-edge fields like artificial intelligence and cloud computing provide new growth opportunities.