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TENCENT HOLDINGS LIMITED

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Delayed Hong Kong Stock Exchange  -  04:08 2022-08-12 am EDT
304.20 HKD   +0.20%
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Tencent Falls Further as Top Shareholder Looks to Pare Stake

06/27/2022 | 10:21pm EDT

By Clarence Leong


Shares of Tencent Holdings Ltd. are trading lower for a second day in Asia after its largest shareholder said it would sell part of its stake in the Chinese internet giant to fund a share buyback program.

Tencent shares are down 5.0% at 359.20 Hong Kong dollars (US$45.77) early Tuesday in Hong Kong, trading near their lowest closing level in almost a month. The stock has lost about 19% this year.

Amsterdam-based internet conglomerate Prosus NV, a unit of South Africa's Naspers Ltd., on Monday said it will start unloading small numbers of Tencent shares to fund an open-ended share-repurchase program. Prosus holds roughly a 29% stake in Tencent.

Tencent's Hong Kong-listed shares closed Monday down 1.6%.

Analysts said the share sale is likely to hurt sentiment on the Chinese tech company in the short term.

The move is "more negative than a regular insider's selling" because Prosus has walked back on an earlier promise not to sell more Tencent shares until 2024 and hasn't specified how much of the stake it will sell, Nomura analysts Jialong Shi and Thomas Shen said in a note.

"We expect Tencent shares to trade under pressure in the near term," they added, while keeping a buy rating and HK$455.00 target price on the stock.

China Galaxy International Securities analyst Mark Po said in a note that Prosus' plan "may cap Tencent's near-term performance," but added that the news is "fully digested." Mr. Po said he has a constructive view on Tencent partly because messages from Beijing seem to be turning more positive on the sector. The brokerage keeps an add rating on the stock with a HK$440.60 target price.

Daiwa Capital Markets analysts also think the share sale will dampen sentiment, but said in a research note that actual shares sold could be less than the block trades conducted by Naspers in previous years. Daiwa has a buy rating on Tencent.


Write to Clarence Leong at clarence.leong@wsj.com


(END) Dow Jones Newswires

06-28-22 0021ET

Stocks mentioned in the article
ChangeLast1st jan.
NASPERS LIMITED -2.58% 2444.17 End-of-day quote.-1.13%
PROSUS N.V. -1.23% 62.87 Real-time Quote.-14.50%
TENCENT HOLDINGS LIMITED 0.20% 304.2 Delayed Quote.-33.41%
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Analyst Recommendations on TENCENT HOLDINGS LIMITED
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Financials
Sales 2022 579 B 85 855 M 85 855 M
Net income 2022 115 B 17 060 M 17 060 M
Net cash 2022 84 382 M 12 514 M 12 514 M
P/E ratio 2022 22,6x
Yield 2022 0,43%
Capitalization 2 496 B 370 B 370 B
EV / Sales 2022 4,17x
EV / Sales 2023 3,48x
Nbr of Employees 116 213
Free-Float 62,5%
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Mean consensus BUY
Number of Analysts 53
Last Close Price 261,67 CNY
Average target price 390,76 CNY
Spread / Average Target 49,3%
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Managers and Directors
Hua Teng Ma Executive Chairman & Chief Executive Officer
Chi Ping Lau Chief Strategy & Investment Officer
Hai Feng Lin President
Shek Hon Lo Chief Financial Officer & Senior Vice President
Chen Ye Xu Chief Information Officer
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