[ET Net News Agency, 14 January 2021] Goldman Sachs trimmed its target price for
Tencent Holdings (00700) to HK$705 from HK$783 and reiterated its "buy" rating.
The research house hosted Tencent's CSO James Mitchell, at its Technology and Internet
conference on 12 January. The discussion reaffirms Goldman's positive secular stance on
Tencent with its (1) ongoing compliance with the evolving regulatory landscape; (2) ample
monetization potential of online games ahead of mobile title launches based on two of the
most successful PC games in history; (3) strong prospects for social advertising backed by
strengthening advertising capabilities; (4) healthy cloud revenue mix migration; and (5)
improving profit generation of its diversified investee portfolio.
Regarding Tencent's investment portfolio, Goldman cited management saying that the value
of minority investments (10%+ equity stake) will gradually unlock and flow into Tencent's
earnings, given (1) many investees (such as JD.com/Meituan/PDD) are growing rapidly and
are profit-making now, and (2) Tencent is getting more active in selective divestment (in
the +US$bns in the past few months, per management). (KL)