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Is Now An Opportune Moment To Examine Tencent Holdings


Or tech giant Tencent reports earnings in the coming week the works of the prisoner and Brian Curtis are standing by with more Bob Tencent holdings is reporting earnings next weekend may provide a degree of hope that some firms are managing well through the crisis Bloomberg intelligence says the ten cent is likely to report strong fourth quarter sales and profit growth as it expands gaming fintech and social ad businesses then I thought we'd take a look at this entire area with Bloomberg's face turned laying to get some insights into ten cent and others and how they are managing through the coronavirus survey thanks very much for joining us now we had some warnings already from companies like Ali Baba and JD dot com and we had been told or with its earnings missing estimates contents sent bucked the trend yeah Brian I think we we got to recognize that the the quarter data reporting is the fourth quarter right and that's really before the virus outbreak started in January so I think fourth quarter results probably going to be intact groove is robust online games is recovering from the regular tree set back in twenty eighteen at stake spending so all's good right but what the market will really be looking for is any form of guidance into what the first quarter's going to look like and we've seen data that suggests that the show online services such as online games online video who work from home software cloud computing stuff like that has actually seen increased usage imprint the penetration with the outbreak in January and February physical businesses e-commerce foot delivery these things have obviously seen a lot of disruption because of travel restrictions and and logistics disruptions and so on so in terms of what the market had been discounting for the first quarter considering the fact that the lunar new year holiday was a major component in that especially working E. commerce is related does there have to be a major re thinking now in terms of earnings expectations I think a lot of fun it has been priced in worship places that obviously in the loss a couple of weeks being the not doing too well full China internet companies so we've seen reports coming out from the likes of Ali Baba VIP shopping portal and JD suggesting that there will be a fairly significant sales contraction in the first quarter the upside is most of these companies are now saying that the increase penetration the accelerated user adoption is probably going to benefit them down the road when the epidemic subside so that it is difficult to quantify and I don't think a lot of consensus numbers have that in yet you think that this would put a lot of pressure on these companies to control their costs or in the case of ten cent do you think they're doing so this Stenson and I would see the entire time to eat internet space in general has been curtailing costs expansion in the loss a year and that actually has been driven in part by the trade war with the U. S. macroeconomic concerns so people have been tightening their belts already and with this virus outbreak impacting sales in the coming quarters all to it's likely to cost controls will heighten having said that a lot of these companies E. commerce companies for example Ali Baba and people don't have been put in place to support measures for the merchants and they use US subsidies to promote more spending by the users weaving commissions from merchants especially for delivery companies like me tons of these things put up her the bottom line right at least for the next one to two quarters yeah and maybe that will show up in the equity price action but I'm concerned about the credit side of the equation to particularly as we given all the stresses that we're been talking about in financial markets see credit spreads to a white now to bid it mean if you look at the bonds Ian and ten cents for example how have they been trading in is there a lot of concern on the credit side of the ledger I think the for this particular space all the companies are basically that cash and the the highly cash flow generate if every quarter even with a sales decline of fifteen to twenty percent in the coming quarters it is quite likely that the cash flows will be positive so I I'm not too concerned about the bonds that that Tencent Alibaba Baidu and

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Is Now An Opportune Moment To Examine Tencent Holdings

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