Equity Valuation & Analysis Report - Tencent Holdings Limited

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Equity Valuation & Analysis Report

ACCT6111E Business Valuation & Analysis
Instructor: Professor Albert Tsang

Team members
Name Student ID
Winnie Yam 1155025593
Sherry Zhang 1155023131
Fiona Tong 1093644801
Tommy Wu 1155021510
Robert Pun 1155026071

21 November 2013

TABLE OF CONTENTS

1.0 Executive summary [3]

2.0 Industry overview [4]

3.0 Company overview [6]

4.0 Financial statement analysis [12]

5.0 Profitability analysis [23]

6.0 Company valuation [27]

7.0 Concerns beyond financials [32]

8.0 Recommendations [35]

Bibliography [36]

List of Exhibits [37]
List of Appendix [48]
…show more content…
However, one should note that the internet service industry is highly dynamic due to technological advances and changes in user preferences that the impact of each of the above forces and industry attractiveness changes from time to time, for instance, as shown in Table 2.0.1 below: Now Near Future
Threat of new entrant Moderate Moderate
Threat of substitutes Low Moderate
Bargaining power of buyers Low Moderate
Bargaining power of suppliers Moderate Moderate
Competition Moderate Moderate
Industry attractiveness Good, especially for leading players Moderate
Table 2.0.1 Current and future industry dynamics

3.0 Company overview
Tencent Holdings Limited (“Tencent” or “the company”)is a China-based internet services providing company that was founded by found in November 1998 by Ma Huateng and Zhang Zhidong, whose revenue was originally derived from advertising and premium users of QQ, and it demonstrated rapid growth in mid of 2000’s upon the launching of fee-based QQ mobile, mobile value-added services (MVAS) and internet value-added services (IVAS) and became listed on the Hong Kong Stock Exchange on 16 June 2004 (Hong Kong Stock Code: 0700) with gross proceed of RMB1,905.2 million[1].

Tencent aims at providing one-stop online lifestyle services to customers and thus provides users with a highly diversified product portfolio that meets the communication, information, entertainment and transaction expectations. The year of

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