Rate Of ReturnFinancial Mom Weekly Summary 138: Tencent Holdings Q1 Earnings Report Tracking
" When placing longer-term trades, consider additional factors that can increase your odds of success."
Recently, while writing my weekly summary, I was reminded of a passage from the book Futures Heroes I read this year.
One of the interviewees, Zhu Tingting, champion of the 2009-2010 Futures Live Trading Competition and an expert in 1-3 day swing trading, said:
When placing longer-term trades, consider additional factors that can increase your odds of success,
such as asset cyclicality, institutional holdings data, capital flows, macro trends, fundamentals, etc.—don’t rely solely on technical analysis.
I don’t call this fundamental analysis; I call it comprehensive analysis or intelligence analysis. Intelligence analysis means identifying the dominant factors affecting asset prices at a given stage, then combining them with technical analysis to place bets.
What a brilliant take on comprehensive/intelligence analysis! From my observations, many investment masters don’t rely on a single factor.
For example, Peter Lynch often reviewed charts of his past winning stocks, subtly incorporating technical analysis to filter investment targets.
Even value investors must consider market cyclicality to capitalize on Mr. Market’s occasional extremes for better entry/exit prices—though they know such opportunities are rare.
From this perspective, classifying investors depends on which intelligence factors they specialize in/prioritize,
but that doesn’t mean they ignore other factors that could improve their odds.
History has repeatedly shown that when multiple intelligence factors align, it’s a once-in-a-lifetime opportunity.
01—Live Trading Stats & Capital Flow Tracking
This week’s live trades: None
This week’s live stats:
Last week, Tencent Holdings (0700.HK) rose 7.45%, Focus Media (002027.SZ) gained2.72%, Muyuan Foods (002714.SZ) climbed0.85%,while Changchun High-Techfell2.26%,and Lead Intelligent dropped5.5%.
Starting November 2023, live performance stats will be disclosed monthly/on trading weeks. No stats this week due to inactivity.
This week’s capital flow tracking:
The goal is to help retail investors identify turning points in fundamentals by monitoring institutional flows—where sustained inflows often signal improving fundamentals.
Because big money only commits when they see real operational improvements. Otherwise, buyback-driven rallies are short-lived.
Note: Always check for recent buyback/insider buying announcements when tracking flows, ideally during oversold conditions or around earnings.
Case study:
Tencent’s 100%+ rebound last year saw uninterrupted institutional inflows despite pullbacks—a textbook example of flow-price synergy.
This week, we track Lead Intelligent (near oversold) and Tencent (post-earnings):
1. Lead Intelligent
Lead’s repeated oversold conditions show technical analysis works for short-term moves,
but long-term investing requires fundamentals and flows—which often corroborate each other,
since money follows conviction in fundamentals.
As Zhu Tingting said: Conduct whatever intelligence analysis aids your decisions.
Lead fell 5.5% on heavy outflows this week—no inflows yet suggest fundamentals remain weak. Monitoring continues.
2. Tencent Holdings
Tencent’s two-month rally reflects
fundamental recovery convincing institutions to deploy capital, manifesting in a V-shaped technical rebound—
proving that the rarest opportunities emerge when multiple intelligence factors converge.
The key is identifying dominant price drivers at each stage, then combining them with technicals to time entries.
Post-oversold/earnings assets hinge on whether fundamentals improve beyond expectations to sustain institutional confidence.
02—Tencent Q1 Earnings Review
I. Operations: Net profit growth outpaced revenue, with quarterly momentum far exceeding past quarters and market expectations. Sustainability requires further tracking.
1. Revenue & Profit
YoY, Tencent’s Q1 profit growth dwarfed revenue, with quarterly momentum surpassing recent history—yielding stellar EPS comparisons.
Both EPS and total revenue/EBIT exceeded consensus estimates.
With fundamentals surging, the question is whether drivers are sustainable.
2. Core Platforms & Growth Levers
WeChat/QQ MAUs remain stable (WeChat +YoY, QQ -YoY but flat QoQ), while paid subscriptions grew 12% YoY.
Management outlined four improvement drivers:
1. Early success in game studio adjustments boosted total gaming bookings, laying groundwork for future revenue growth.
2. Premium monetization (Video Account ads, Search ads, mini-game platform fees) drove margins/operating profit growth above revenue.
3. Accelerating capital returns via >HKD100B 2024 buyback program and higher dividends.
4. Ongoing AI/platform/content investments.
Track these initiatives for sustainability clues.
Tencent’s strength prompted me to revisit 100x Super Stocks’ 12 Fundamental Rules for Analyzing Superperformers (see Weekly Summary 132).
Tencent now meets 8/12 criteria—
sustainability depends on tracking all 12, including:
II. Segment Watch: Low 2022-23 base effects require more time to confirm recovery.
Tencent’s 5-year net profit CAGR is 5.24% (slow growth).
Q1’s 61.59% YoY surge benefits from depressed 2022-23 comparables—
whether it can transition to rapid growth requires future quarterly validation.
Hope this helps. Until next time.
Disclaimer: This shares my trading framework—not advice. Mentioned stocks aren’t recommendations. Markets carry risks; invest rationally!
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