Saturday, May 18, 2024

Tencent’s Buyback Plan in Focus as China Tech Earnings Start – BNN Bloomberg

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(Bloomberg) — Investors will closely watch for Tencent Holdings Ltd.’s buyback plan in earnings due Tuesday as the company’s shares rebound.

The most valuable Chinese technology company is ramping up buybacks to boost shareholder returns amid weak earnings and economic uncertainties. The tech bellwether is expected to report the slowest revenue growth in more than a year in the first quarter, according to analysts’ estimates. 

Tencent, whose shares have risen 44% from a January low, plans to double its stock buyback program to more than HK$100 billion ($12.8 billion) in 2024 and has already purchased about a quarter of it so far, according to a Bloomberg analysis.

Any change in its commitment to boost shareholder returns will have implications for the broader China market. Alibaba Group Holding Ltd., which green-lit another $25 billion in stock repurchases in February, will also publish results Tuesday, followed by Inc. and Baidu Inc. later this week. These four firms alone represent more than a quarter of the MSCI China gauge.

Tencent, Alibaba Earnings Are Key to Longer China Stock Rally

“I expect the company to at least maintain the current absolute daily buyback amount,” said Ivan Su, an analyst at Morningstar Inc. “However, due to the recent increase in share prices, this will result in fewer shares being repurchased, which could be perceived as a slight negative by value investors.”

–With assistance from Julie Chien.

©2024 Bloomberg L.P.

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