On the 21st birthday, just two days later, Tencent handed over the first answer to the new year, the 2019 quarterly report. The report period of this financial report ended on September 30, which coincides with the first anniversary of Tencent’s announcement of organizational restructuring. On the same day of the transaction, Tencent also ushered in a new rival in the Hong Kong stock market: Alibaba officially submitted preliminary IPO documents to the Hong Kong Stock Exchange to confirm the Hong Kong IPO.
The financial report shows that Tencent’s revenue in the third quarter was 97.236 billion yuan, a year-on-year increase of 21%, which was less than the market expectation of 99.044 billion yuan; the company’s profit attributable to equity (ie net profit) was 20.382 billion yuan, down 13% year-on-year. It is also less than the market expectation of 23.531 billion yuan.
Tencent attributed the expected loss of profits to investment impairment. After eliminating this factor, according to non-GAAP, Tencent Q3’s net profit was 24.412 billion yuan, a year-on-year increase of 24%, which is a moderate increase.
Do Tencent want to prepare for the winter?
As of November 13, Hong Kong stocks closed. Tencent reported a decrease of 0.85% to HK$327.4 and a market capitalization of approximately HK$313 million. After entering 2019, Tencent’s share price has been ups and downs, and now it has fallen back to the level of the beginning of the year. Compared with the closing price of HK$306.6 on January 2, it rose by about 6.7%, which is lower than most of the Chinese stocks.
Of course, Tencent’s decline today is also due to the overall situation of Hong Kong stocks. Affected by social factors, the Hang Seng Index fell for three consecutive days and fell 1.8% today to 26,571.
This is not an inspiring financial report. In addition to the fact that both revenue and profit are not as good as market expectations, Tencent has begun to “small and shrink” – the main performance is to start cutting expenses. Tencent called this “enhanced flexibility.”
Tencent is going to prepare for the winter?
In the earnings report, Tencent mentioned, “We streamline operations to increase flexibility, such as the ratio of sales and marketing expenses to revenue in recent quarters.The rate has dropped.” The move to cut marketing expenses has continued for four quarters, and the ratio of marketing expenses to revenue has decreased from 8.16% in Q3 in 2018 to 5.88% in Q3 in 2019. The ratio of Ali in the next year is maintained throughout the year. About 10%.
For Tencent, which has a huge volume, cutting marketing spending may not be rudely defined as “preparing for the winter” because its investment in research and development is still generous. The general and administrative expenses for the quarter amounted to 13.536 billion yuan, a year-on-year increase of 24%. The increase was mainly due to the increase in research and development expenses and employee costs.
But the cuts in four consecutive quarters at least indicate that Tencent has no intention of using money to buy for growth, nor has it been determined to “make a big job” in the promotion of new business.
Growth depends on finance and cloud
For most investors in Tencent, they have accepted Tencent’s transition from a high-growth era to a medium-speed or even low-speed growth.
This picture shows the growth rate of Tencent’s revenue in recent years-
Cartography: Tiger Sniffing
But the volume is as big as Tencent. If you want to return to the 400 dollar level, you need a new and powerful growth point.
Tencent’s revenue consists of four segments: value-added services, financial technology and corporate services, online advertising and other businesses. Financial technology and corporate services are the sectors that have officially appeared in the financial report since 2019, and have become the growth point of the two quarters.
In the quarter, financial technology and corporate services revenue was 26.8 billion yuan, a year-on-year increase of 36%. More importantly, the proportion of this sector’s revenue to total revenue has reached 27.6%. In the past three quarters, this proportion has been increasing.
There is also a good performance of Tencent Cloud’s revenue. This is the first time that Tencent has disclosed the cloud separately.Quarterly income of revenue – In Q3, cloud revenue increased by 80% year-on-year to 4.7 billion yuan. According to Tencent, this is mainly due to the increased usage of existing customers and the expansion of the customer base of education, finance, people’s livelihood services and retail.
Cartography: Tiger Sniffing
On the other side, the game version is getting faster. In the third quarter, Tencent had a total of 13 games approved, including 4 end games and 9 mobile games.
But this quarter’s game business performance is not warm. Q3, online game revenue reached 28.6 billion yuan, an increase of 11%. Among them, mobile game revenue was 24.3 billion yuan, a year-on-year increase of 25%; but the end-game income continued to decline, recorded revenue of 11.5 billion yuan in the quarter, down 7% year-on-year and 2% quarter-on-quarter.
After the full-scale commercialization of the “eat chicken” game, the outside world generally gives high hopes. However, Tencent mentioned in the financial report that “Peace Elite” is still in the early stage of confirming deferred income” – that is to say, the income from “eat chicken” is still behind.
Ads are a bit bleak
The disappointing part is mainly in advertising.
Tencent Q3’s online advertising revenue reached 18.4 billion yuan, a year-on-year increase of 13%. Among them, media advertising revenue was 3.7 billion yuan, down 28% year-on-year and 17% quarter-on-quarter; social and other advertising revenues reached 14.7 billion yuan, up 32% year-on-year,
That is to say, the social advertisements represented by WeChat friends circle and QQ watchful performance performed well, and the growth rate accelerated in this quarter; the media represented by Tencent News, Tencent Video, and the information flow advertisement in the Daily Express The advertisements performed poorly. Tencent attributed this in the earnings report as “the uncertainty of content distribution caused the video advertising advertising revenue to fall” – Tencent is still struggling with the byte beating and does not prevail.
In a depressed environment