Making Sense of TenCent
Company : Tencent Holdings, 700.HK 1) Thesis / Decision to buy :Hong Kong market and the technology / gaming sector has been heavily battered, and presents a margin of safety. Ten-cent has suffered 20% decline in its stock price due to the tightened scrutiny on the addiction of video gaming on the residents (Moat of the product line is too strong to the point of requiring government intervention) . I believe these headwinds are temporary as the government is not totally shutting down the industry, and is merely putting a hold on the monetization pipeline of the soon to be released games. Its short time revenue is affected but should not damage its fundamentals. Ten-cent is not in a dire debt position and has considerable free cash flow. A delay in the next 2 quarters while the government undergoes restructuring, should not affect the superior economics of its premium gaming franchise. In addition, it has a powerful super-app in the form of We-chat, which is dominant and enj