Latest public information from the Hong Kong Stock Exchange shows that in the third quarter $TENCENT (00700.HK)$ the repurchase amount reached 35.9 billion Hong Kong dollars. In the first three quarters of this year, Tencent has cumulatively repurchased 0.25 billion shares, with a total repurchase amount of 88.3 billion Hong Kong dollars, reaching a historical high for the same period. As of the close on October 7, Tencent has repurchased over 89 billion Hong Kong dollars this year.

Today, affected by the overall correction of the Hong Kong stock market, Tencent Holdings also experienced a correction, with a drop of about 6% as of 15:20. However, it is worth noting that as of October 7th, Tencent Holdings has risen by 65% year-to-date, significantly outperforming the market.

It is reported that in this year's Hong Kong stock buyback frenzy, Tencent's repurchase amount has exceeded 40% of the repurchase amount of listed companies in the same period, driving a shareholder return frenzy for listed companies in Hong Kong.

It is worth mentioning that the shadow of Prosus, a major shareholder of Tencent in South Africa, reducing its holdings has been looming. With Tencent almost offsetting the pressure from the major shareholder's reduction through repurchases, data shows that in the third quarter of this year, Prosus sold 31.6 million shares of Tencent, weakening its reduction compared to the second quarter, accounting for only 33% of the shares repurchased by Tencent over the same period.

In the Hong Kong stock buybacks, Tencent is far ahead.

Earlier this year, Tencent announced the launch of a billion-dollar share buyback plan. With the first three quarters of the year already over, how has Tencent's buyback progressed?

According to the latest data disclosed by the Hong Kong Stock Exchange, Tencent completed a buyback of 35.9 billion Hong Kong dollars in the third quarter, while buybacks of 14.8 billion Hong Kong dollars and 37.5 billion Hong Kong dollars were completed in the first and second quarters respectively. The total buyback amount for the first three quarters is approximately 88.3 billion Hong Kong dollars, steadily advancing the announced 'over a billion' buyback plan, and is expected to be completed in the fourth quarter.

According to Tencent's buyback announcement, the average buyback price in the third quarter was 378.4 Hong Kong dollars, a 5% increase from the second quarter's 361.8 Hong Kong dollars.

Data shows that the continuous rise in stock prices since the end of September has not stopped Tencent's buyback momentum. In the three trading days of October 3rd, 4th, and 7th, Tencent continued to repurchase stocks, with the highest repurchase price reaching 482 Hong Kong dollars per share on October 7th.

Meanwhile, Tencent's daily repurchase amount has decreased. Some market analysts calculated that since the end of September, Tencent's daily repurchase amount has dropped from 1 billion Hong Kong dollars to suddenly decreasing amounts like 0.7 billion, 0.15 billion, 0.25 billion, 0.137 billion, and 0.502 billion Hong Kong dollars.

In response to this, industry insiders paying attention to Hong Kong stocks analyze that the recent reduction in Tencent's repurchase amount is due to the Hong Kong Stock Exchange's requirement that the repurchase price of Hong Kong stocks cannot be higher than 5% of the average closing price of the past 5 trading days. The substantial rise in stock prices has led to a decrease in the number of times Tencent can repurchase.

In addition, in mid-May of this year, when Tencent's stock price rebounded to around 400 Hong Kong dollars, Tencent's President, Liu Chiping, stated during an institutional call that despite the rise in stock price, the company's development remains attractive. Tencent will continue to execute the share buyback plan at the pace announced.

According to Wind data, as of the third quarter of this year, 239 Hong Kong-listed companies have implemented buybacks, totaling over 200 billion Hong Kong dollars. Tencent alone has contributed to more than 40% of the total amount of buybacks on the Hong Kong Stock Exchange, driving a wave of shareholder returns for Hong Kong-listed companies.

Offsetting the pressure from the large shareholder's shareholding reduction.

Tencent's significant shareholding increase is not only based on its confidence in its own development but also aims to alleviate the pressure from the large shareholder's shareholding reduction.

According to reports, the Hong Kong Stock Exchange's new regulations no longer require the mandatory cancellation of shares repurchased by listed companies. However, Tencent still chooses to cancel the repurchased shares, which helps enhance earnings per share.

According to official statistics, Tencent repurchased 0.25 billion shares this year, with the number of shares canceled exceeding 0.25 billion. As of October 8th, Tencent's total shares were 9.28 billion, a decrease of 0.33 billion shares from the 9.61 billion shares at the end of 2021, reaching the lowest level in a decade.

As early as the end of June 2022, Tencent Holdings' largest shareholder Prosus announced the start of a long-term, open-ended share buyback plan to raise funds for repurchasing its own shares by selling Tencent company shares in an orderly manner.

Public data shows that Tencent's share buyback volume in the third quarter (94.9 million shares) has exceeded three times the number of shares sold by Prosus. Calculations show that in the third quarter of this year, Prosus reduced its Tencent holdings by 31.6 million shares, a decrease in selling intensity from the 37.4 million shares sold in the second quarter, with the ownership ratio decreasing slightly from 24.4% at the end of the second quarter to 24.2%. The liquidity pressure in the secondary market from Tencent's major shareholder selling shares has been almost completely offset.

In terms of performance, Tencent's performance this year has been impressive, surpassing external expectations. In particular, Tencent's emerging businesses such as Tencent Video Number, Mini Programs, AI large models, SaaS, and other new growth businesses have thrived, bringing incremental performance to Tencent and giving Tencent the confidence to accelerate its share buyback.

Tencent's semi-annual report shows that the company achieved revenue of 320.618 billion yuan in the first half of the year, a 7% year-on-year increase; net income (Non-IFRS) was 107.6 billion yuan, a 53% year-on-year increase.

Editor/rice