Event: on December 23, Tencent announced that he would issue about 460 million shares of JD.com to shareholders in the form of an interim dividend. After this dividend, Tencent's shareholding in JD.com will be reduced from 17% to 2.3%, and will no longer be the largest shareholder, while Liu Chiping, president of Tencent, will also step down as a director of JD.com.
Comments:
Tencent dividend incident is expected to become a turning point for the company's market. The converted amount of JD.com stock is more than 100 billion yuan, which is the highest in the history of the company's dividend. We believe that although investors recognize Tencent's fundamentals and growth, the current market is still pessimistic about Tencent, and this generous dividend will help boost investor confidence and reverse market expectations.
The impact of strong policy regulation on the company is coming to an end. This year, regulators firmly oppose monopoly and prevent disorderly expansion of capital. In this wind, the intensive introduction of regulatory policies of various departments, Tencent games, financial technology, advertising, investment mergers and acquisitions and other business lines have been affected to a certain extent, Tencent is in a more passive position. The goal of reducing the holdings of JD.com shares through dividends shows that the company takes the initiative to sort out the policy risks of its internal business and releases to the regulatory authorities a correct attitude of actively cooperating with antitrust policies.
The reduction of JD.com shares will help to shape the positioning of Wechat's platform development. Mini Program's annual transaction volume (GMV) exceeded 1.6 trillion in 2020, an increase of 100% over the same period last year, and is expected to maintain rapid growth in 2021. Mini Program transaction volume is mainly composed of e-commerce, travel, takeout, catering, hotels, etc.; and explore the live e-commerce model after Wechat video number, inviting many brands to enter; at the same time, in the context of Internet openness and interoperability, Taobao special version is connected to WeChat Mini Programs. Therefore, the company holds a higher proportion of equity interests of JD.com, Pinduoduo and Meituan, and gives Pinduoduo and JD.com the entrance to the center of Wechat, which is not in line with the platform positioning of Wechat.
Investment advice: the company has a solid basic market, the core business to maintain steady development, and actively explore new growth poles, with the driving force for sustainable development. At the same time, with the gradual weakening of the impact of external environmental disturbances, the company's fundamentals will continue to improve. We estimate that the company's NON-GAAP net profit in 2021-2023 will be 138.76 billion yuan, 179.79 billion yuan and 206.76 billion yuan respectively, and the EPS will be 14.33 yuan, 18.57 yuan and 21.35 yuan respectively. Corresponding to the existing share price PE is 26Xprit 20x and 18x respectively, maintaining a "highly recommended" rating.
Risk hints: (1) stricter user privacy protection policy; (2) stricter antitrust supervision.