Source: Broker China
Author: Yang Shan
On the evening of October 4, Tencent revealed that it spent about HK$4014.4 million on the Hong Kong Stock Exchange to repurchase 1.35 million shares on October 4.
According to Wind statistics, since this year, Tencent has repurchased 86 times, with a total repurchase amount of HK$31.36 billion, accounting for 39% of the total repurchase amount of Hong Kong stocks, topping Hong Kong stocks.
Recently, Tencent officials announced a big move. That is, at the Tencent Global Digital Ecosystem Conference in September, Tencent's hybrid model was officially unveiled and announced that it will be open to the public through Tencent Cloud. Previously, Tencent achieved revenue of 149.2 billion yuan in the second quarter, up 11% year on year; net profit not under IFRS was 37.548 billion yuan, up 33% year on year.
However, the overall decline in the Hong Kong stock market in the first half of this year, combined with pressure from the majority shareholders to reduce their holdings, and a series of favorable news and continuous repurchase actions, Tencent's stock price growth is still weak.
Repurchases continued to dominate Hong Kong stocks during the year
While the A-share market was closed, Tencent continued to buy back H-shares without stopping after resuming trading on October 3.
$TENCENT (00700.HK)$It was announced on the Hong Kong Stock Exchange that on October 4, the Hong Kong Stock Exchange spent about HK$4014.4 million to repurchase 1.35 million shares. The repurchase price ranged from HK$299.8 per share to HK$295.4 per share.
In fact, this is a normal move in Tencent's high-frequency repurchase campaign.
According to Wind statistics, since this year, a total of 156 Hong Kong stock companies have made repurchases. Judging from the repurchase amount, the “shareholder” Tencent has repurchased 86 times since this year, with a total repurchase amount of HK$31.36 billion, accounting for 39% of the total repurchase amount of Hong Kong stocks. Followed by$AIA (01299.HK)$, 135 repurchases, with a repurchase amount of HK$20.08 billion, accounting for 25% of the total repurchase amount.
Earlier, Tencent's half-year results showed that in the first half of 2023, Tencent bought back a total of 483.46,500 shares at a total cost of about HK$16.9 billion and cancelled them. Based on the repurchase amount, in the first half of this year, the average repurchase price of Tencent was close to HK$350 per share.
Going back in time, Tencent's repurchases have all reached record highs in recent years. A total of HK$2.6 billion was spent on repurchases in 2021, and a total of HK$33.8 billion in repurchases in 2022. Up to now, Tencent has spent HK$33.6 billion. According to Tencent's monthly repurchase pace, it is also expected to surpass the repurchase amount for the whole of 2022.
Tencent said that the repurchased shares have been cancelled, and the purpose of carrying out the repurchase is to increase shareholder value in the long term.
The overall downturn in H-shares and pressure on shareholders to reduce their holdings
Although Tencent has spared no effort in repurchasing, the stock price boost was not obvious due to the impact of the overall H-share market environment and pressure from majority shareholders to reduce their holdings.
The data shows that the Hong Kong stock market has continued to decline this year.$Hang Seng Index (800000.HK)$At present, it has dropped more than 20% from its high at the beginning of the year, and the cumulative decline since this year has exceeded 13%.$Hang Seng TECH Index (800700.HK)$It also fell more than 20% from its high at the beginning of the year, with a cumulative drop of more than 9% this year.Overall, with the exception of Hang Seng's flagship indicesHang Seng Shanghai-Shenzhen-Hong Kong Stock Connect AH Premium IndexOther than that, the rest have all declined by varying degrees.
In terms of stock price performance, Tencent continued to fluctuate and decline after rising to HK$413.65 per share in January this year. As of the press release on October 5, Tencent reported HK$299.4 per share, down about 27% from its high at the beginning of the year.
As the Hong Kong stock market continues to decline, Hong Kong-listed companies, including Tencent and AIA, are vigorously buying back stocks in order to raise valuations.
At the same time, pressure from Tencent's majority shareholders to reduce their holdings is also hampering the rise in its stock price.
According to the Hong Kong Stock Exchange's equity disclosure information, on April 25, Naspers Limited, the majority shareholder of Tencent, reduced its holdings of Tencent by 790,000 shares at a price of about HK$337 per share. After the holdings were reduced, the number of shares held by the majority shareholders was 2,488 billion shares, with a shareholding ratio of 25.99%. This means that in less than half a year from December 13, 2022 to April 25, 2023, the majority shareholders reduced their holdings by more than 100 million shares.
According to data, Naspers is a multinational listed media group located in South Africa. MiH TC Holdings Limited (“MIH” for short), a subsidiary of ProSUS, is the largest shareholder of Tencent. Tencent's 2022 report shows that ProSUS holds 26.93% of Tencent through its subsidiary MiH, making it the largest shareholder of Tencent.
On June 27 of last year, Prosus and Naspers announced that they would sell their Tencent shares in an orderly manner, and that the funds obtained would support Prosus and Naspers' share repurchase plans. According to the Hong Kong Stock Exchange, Naspers Limited reduced its holdings of Tencent by a total of 280 million shares over a period of about two years, and the shareholding ratio fell accordingly from 28.86% to 25.99%.
According to the announcement, Tencent will disclose the results for the first three quarters of this year on November 15, 2023. In the second quarter of 2023, Tencent achieved revenue of 149.2 billion yuan, up 11% year on year; net profit of 26.17 billion yuan, up 41% year on year; net profit not under international financial reporting standards was 37.548 billion yuan, up 33% year on year.
Editor/jayden
