China’s largest online gaming and social media network

We have owned Tencent in our Greater China portfolios for more than 10 years, first purchasing a position in the company around two years after its IPO. Tencent is, in our view, one of the best companies to own in the Chinese internet space – a high quality business with a strong management team.

The technology giant is the largest social media network and online gaming company in China, with growing businesses in online advertising, cloud services and e-payments/e-commerce. Although Tencent is at an early stage of monetisation with the majority of revenue still from gaming, we believe that its revenue structure will change as consumers start to pay more for services such as videos and music and corporates start spending more on advertising.

In a more connected and automated world, Tencent has been a major beneficiary of the rise in everyday technology and ‘smart’ devices and continues to deliver high rates of growth on top of an already substantial base. After researching the company, we were impressed by the visionary management and were buoyed by their vision of the internet and entertainment. Governance standards are high and management is aligned with shareholders, via share ownership in the listed company.

Revenue by segment in billion (RMB)

Source: Company reports, FSSA Investment Managers, as at 31 December 2020.

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