China's IM King Tencent Underestimated and Undervalued?
From The Standard: Winning streak for online game firms
"In this week's earnings reports, China's instant messaging leader, Hong Kong-listed Tencent, posted strong growth in online advertising and online gaming (...). Tencent Tuesday reported 11 percent revenue growth on US$40.3 million in revenues for the second quarter. Net income grew 93 percent quarter on quarter to US$22.6 million."
"Tencent's US$22 million in net income was higher than that for Sina, Sohu and Baidu combined in the second quarter. It could be argued that Tencent is relatively undervalued at roughly US$1.7 billion compared to its Nasdaq-listed cousins. Sina is valued at around US$1.5 billion while Baidu's market capitalization is more than US$2.5 billion."
"Tencent generates revenues from advertisements on its instant messaging service QQ and its Internet portal QQ.com. Despite the high growth, revenues from online advertising account for less than 10 percent of total revenues. The bulk of Tencent's revenues come from wireless value-added services (41 percent of total revenues) and Internet value-added services including Tencent's casual games platform (50 percent of total revenues)."
"The company's casual games platform hit 1.44 million peak concurrent users, making it China's leading casual game portal. Tencent pushed back the target release date for its first massive online role playing game to the fourth quarter of 2005."
"Tencent also plans to continue with its plans to launch its own online consumer-to-consumer marketplace."
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