Tencent bounces back: What to know about China’s tech giant
About Tencent (SGX: HTCD): A Global Leader in Digital Services Established in 1998, Tencent has become one of the most recognised companies in China and globally, with diverse operations spanning communications, social networks, gaming, music, and cloud services. It’s not only the world’s largest gaming company by revenue but also owns Weixin and WeChat, China’s biggest social networking app, with 1.3 billion active users each month. Source: Company data Well-Diversified Revenue Streams Tencent’s income is drawn from five main areas: Social Networks (19%), Domestic Games (20%), International Games (9%), Online Advertising (18%), and Fintech and Business Services (33%). This broad revenue base has allowed Tencent to sustain an annual growth rate of 14% over the past five years, even as China’s economic growth slowed and regulatory actions affected the domestic gaming market. Source: Company data Tencent is well positioned in growing gaming industry The gaming industry in China is expected to maintain a steady growth trajectory, with a compound annual growth rate (CAGR) of 7.6% from 2024 to 2029. This growth will be largely driven by the continued expansion of mobile gaming and the rising popularity of mini-games integrated into apps like WeChat, which have broadened the gaming market by appealing to a wider range of consumer segments. Additionally, the industry will benefit from the growing prominence of e-sports. China currently has the world’s second-largest e-sports user base at 488 million and is on track to surpass the United States as the leading e-sports market. As a first-mover in the gaming industry and with its consistent investment in new and established game franchises, Tencent is well positioned to capitalise on both the structural growth of the Chinese gaming market and opportunities in global markets. Source: Mordor Intelligence Tencent owns several popular gaming franchises, including King of Honors, Naruto Mobile, Dungeon