Jan 15, 2020 (China Knowledge) - Tencent Holdings Ltd.’s analysts, who have a history of their extremely bullish sentiments, have now been confounded by the momentous rally of Asia’s biggest stock.
Tencent’s shares are hitting close to analysts’ consensus target price which hasn’t happened in nearly two years. It’s one of the most-loved stock in Hong Kong, as none of the 57 analyst ratings tracked by Bloomberg recommend selling the shares.
Shares of Tencent has jumped 27% since an October low, adding USD 108 bln to shareholder value. The share price hit HKD 405 on Monday for the first time since 2018 with Tencent rose as much as 1.6% on Tuesday to HKD 413. A series of block trades amounting to almost 1 million shares crossed Tuesday morning at about HKD 402, indicating that some shareholders are using the rally to take profit. The stock is trading near the most overbought level since late 2017.
“The stock is rising partly due to a better earnings outlook,” said Kevin Tam, analyst at Core Pacific-Yamaichi International. “Its gaming product PUBG Mobile has done very well recently and there are some good signs for its new businesses.”
Revenue from PUBG Mobile was the world’s highest in Dec, based on researcher Sensor Tower. The game achieved the second-most downloads globally last year. Tencent’s Call of Duty: Mobile also made it into the top 10 for 2019, even though it was only released in Oct.
Tencent is working on new initiatives to further monetize its social-networking application Wechat, such as launching more customized tools for users on the platform, according to CICC. “We expect short-term sentiment to rise on new initiatives but believe the actual impact will be limited,” analyst Natalie Yue wrote in a note.
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