Date
15 December 2018
As Tencent readies to report its third-quarter results, investors are hoping that chairman Pony Ma (seen in picture) will offer words of reassurance that can help the stock regain its mojo. Photo: Bloomberg
As Tencent readies to report its third-quarter results, investors are hoping that chairman Pony Ma (seen in picture) will offer words of reassurance that can help the stock regain its mojo. Photo: Bloomberg

Tencent chief, in new song, promises not to let you down

All eyes are on Tencent as the Chinese internet giant prepares to release its third-quarter financial report on Wednesday.

For the moment, the bear seems to have an upper hand over the firm’s stock market prospects, as was the case for much of the time this year after a massive bull run earlier that peaked in January.

Negative sentiments on the once red-hot blue chip gathered pace after the social media and gaming giant reported in mid-August its first quarterly decline in profit in nearly 13 years.

In the second quarter ended June, Tencent recorded a 2 percent year-on-year slide in profit, while revenue grew at the weakest pace in three years.

Now, as it readies to unveil the September quarter results, the broader environment couldn’t be worse on the global markets, setting the stage for further potential slide in the share price — unless the company delivers a massive positive surprise in the financial report.  

A sell-down in tech stocks on Wall Street — which saw Apple plunging 5 percent on Monday — tightened Chinese regulations on gaming firms, and macro uncertainties stemming from the US-China trade war have set up the scene for a bear case for the once-invincible Tencent.

Following a heady ride until early this year, propelled by forecast-beating results for most of the past decade, Tencent is likely to head for a disappointing 2018 in share price performance.

After hitting an all-time peak of about HK$475 on Jan. 23, the stock has tumbled to as low as HK$251.4 late last month, losing more than 47 percent in value. Currently, it is changing hands at around HK$270.

While we can only wait and see as to how it moves after the third-quarter report, shareholders could perhaps take comfort from a new song — “A fresh start” — that chairman Pony Ma and his management team came up with to celebrate the firm’s 20th anniversary on November 11.

The mandarin song carried an English lyric at the end that read:
     This time I will never give up
     This time I will never let you down

Now, many investors must be hoping that Ma is addressing the shareholders when he talks of never letting “you” down, perhaps sending a message that the bad times will end for the stock and that it will recover.

Well, Tencent has been buying back its shares almost every day since mid-August in a bid to prop up the stock price amid broader market weakness.

The lyrics of Ma’s new song went like this, in loose translation: “Perhaps we are no longer as when we were teenagers. Perhaps we could not go back on those days. But I am still energized with blood and the power of stubbornness.

“Perhaps there are regrets in life, perhaps there are dreams we cannot realize, but I still have a good imagination of tomorrow.”

Let’s keep our fingers crossed for tomorrow and determine if the dreams can still be fulfilled.

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RC

EJ Insight writer

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