Tencent Holdings will see revenue grow by 14%

Market (what, how and where Tencent sells)

Business (how much Tencent earn)

Catalysts. How Tencent make more money in the next 5 years

• WeixinVideo Accounts, Mini Games and Weixin Search enhance user value by creating seamless connections with products, services and content while presenting exciting revenue opportunities.Generating high margin revenue streams from own traffic, with platform costs already paid for.
• GamesBrewing Future Growth via Revival of Top Two Games and Emerging FranchisesInvesting to expand into content-driven and casual games
• FintechWeTechnology Limited ("WeBank Technology Services") is established on June 25, 2024, in Hong Kong with a registered capital of USD 150 million.WeBank Technology Services ("the Company") is a wholly-owned subsidiary of WeBank. With WeBank's leading technological pedigree, the Hong Kong-based Company shall dedicate and commit to providing digital financial and infrastructural solutions to clients worldwide.
• SaaSIntegration with Tencent Meeting and Tencent Docs empowers WeCom as the core platform for enhanced collaboration and productivity Deepening connection with Weixin enables differentiated CRM functions in WeCom 
• AISignificant Boost to Advertising Business: Leveraged Tencent Hunyuan，to facilitate tagging and categorisation of content and ad materials.Expanding Cloud Services Solutions: Tencent Hunyuan is accessible via APIs for functions such as coding, data analysis and customer service automationIntegration of AI in SaaS Products: Empowered Tencent Meeting and Tencent Docs for real-time meeting content interpretation and document creationEnhancing Content Production Efficiency: GenAI increasingly facilitating the creation of highquality game contents, such as S+ level skin special effects for Honour of KingsYuanbao AI Assistant: can be used for document analysis and summarisation, and gen-AI search leveraging Tencent’s content ecosystem, including Weixin Video Accounts, Official Accounts, and TME.

Risks

• 25.01.06 U.S. Adds Tencent to Chinese Military Companies Blacklist

This should not affect the bulk of the business, as revenue from outside China represents 9%, (video games). The market has responded by correcting the share price by 10%.

The company has not made official statements but in previous attacks it has solved the situation well

• CompetitorAlibaba, Baidu, Tencent, 360, ByteDance and Huawei.Startups, including some unicorns (with valuations in excess of $1 billion), worth watching include Moonshot AI, Minimax AI, ZhiPu AI, Baichuan AI, 01.AI and Modelbest
• AI legal framework in ChinaIn May 2024, the National Information Security Standardization Technical Committee (NISSTC) published a new draft regulation titled Cybersecurity Technology – Basic Security Requirements for Generative Artificial Intelligence (AI) Service. It encompasses the protection of AI models, the security of training data, and the implementation of general security protocols. It provides guidance for security assessments and regulatory setting for both service providers and regulators

Valuation

• I assume that innovations in AI will improve the efficiency of all business segments, allowing despite competition to maintain a CAGR 14% the next 5 years
• The margin will drop to 22%, due to competition and marketing expenses
• Risk level 10% due to the geopolitical situation.