When Tencent unwound investments in JD.com and Sea, we were speculating more would come.
Our guess was Pinduoduo but it turned out that Tencent chose Meituan instead.
Tencent announced yesterday that they would be distributing Meituan shares to Tencent shareholders.
A Tencent shareholder would receive 1 Meituan share for every 10 Tencent shares held.
Based on a share price of HK$166.40, the value of Meituan shares to be distributed was worth HK$159 billion.
This distribution is equivalent to a 5.7% dividend yield. Shareholders can choose to sell Meituan shares to get the cash.
It is a rather high yield from a tech company.
On the results front, Tencent has showed some recovery. After suffering two consecutive quarters of declining revenue, 3Q2022 saw an uptick in revenue.
Although revenue was still lower than the quarter a year ago by 2%, it grew 5% from the previous quarter.
Profitability improved too, net profits increased by 2% from a year ago and 15% from the previous quarter.
Domestic games revenue remained sluggish but the decline at 7% was manageable and the segment remained as the largest revenue contributor to Tencent. It seems like the regulatory impact has stabilised although shareholders would want to see more improvement.
The results are more encouraging than the previous two quarters but need more quarters to see if Tencent has restarted its growth engine. It must at least surpass the previous record quarterly revenue of ¥144.2 billion, which isn’t far away since the current revenue is just 3% below the record.
Tencent shareholders can also look forward to more distributions as Tencent has a huge investment portfolio that consists of Tesla, NIO, Didi, GoJek, Pinduoduo, Snap, Reddit, Epic games, Supercell, Tencent Music, Spotify, Universal Music Group, Skydance, Kuaishou, Huya, Douyu, Bilibili, Futu and more.
Such distributions are beginning to look like a yearly affair – JD.com was distributed in Dec 2021 and now Meituan in Nov 2022. Perhaps next year we will see Pinduoduo. Quite a good way to receive all these bonus dividends.
