PNK · Communication Services

Tencent Holdings Limited

TCEHY · Internet Content & Information

$55.85

▲ 1.95 (3.62%)

Cached · 10 min

Overall Grade

Defensive

Enterprising

Profitability

A⤢

Gross Profit Margin 57.8%

Operating Margin 33.3%

Net Income Margin 27.4%

Fin. Health

D⤢

Years to Pay Off Debt 8.4 yrs

Working Capital vs Long-Term Debt -$218.7B

Working Capital $147.9B

Valuation

A⤢

Margin of Safety 57.6%

Price-to-Book 0.44x

Cash Flow

N/A⤢

Profitability

Gross Profit Margin 57.8%

Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.

Operating Margin 33.3%

Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.

Net Income Margin 27.4%

Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.

Financial Health

Years to Pay Off Debt 8.4 yrs

Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.

Working Capital vs Long-Term Debt -$218.7B

Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.

Working Capital $147.9B

Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.

Defensive — Graham's strict criteria (P/B, P/E, dividends, stability) · Enterprising — Profitability & cash flow focused, accepts higher valuations for quality

About Tencent Holdings Limited

Tencent Holdings Limited, an investment holding company, provides value-added services, marketing services, fintech, and business services in Mainland China and internationally. The company's consumers business includes communications and social services, such as instant messaging and social networks; digital content, including online games, videos, live streaming, news, music, and literature; fintech services, which include mobile payment, wealth management, consumer loans, and securities trading; and various tools comprising network security management, browsing, navigation, application management, email, etc. Its enterprise business comprises marketing solutions, which offer digital tools, including user insight, creative management, placement strategy, and digital assets management; and cloud services, such as cloud computing, big data analytics, artificial intelligence, Internet of Things, and security and other technologies for financial services, education, healthcare, retail, industry, transport, energy, and radio and television industries. The company also invests in, produces, and distributes films and television programs; offers copyrights licensing and merchandise sales and other services; provides internet advertisement services; and offers software development, and information technology and system integration services, as well as develops and operates mobile games. The company was formerly known as Tencent (BVI) Limited and changed its name to Tencent Holdings Limited in February 2004. Tencent Holdings Limited was founded in 1998 and is headquartered in Shenzhen, the People's Republic of China.

Market Data

Market Cap $503.1B

Enterprise Value $602.3B

P/E (TTM) 14.74

Dividend Yield 8.84%

Exchange PNK

Key Margins

Gross Profit 57.8%

Operating Margin 33.3%

Net Margin 27.4%

Company Info

Sector Communication Services

Industry Internet Content & Information

Employees 115927

Country China

Visit website

📖

Full Graham Analysis

Mr. Market is currently offering Tencent Holdings Limited at $55.85.

The business passes 4 of 6 of Graham's defensive criteria — adequate but not exceptional.

At $55.85, the stock trades below its Graham Number of $131.59 — suggesting a margin of safety exists.

The margin of safety of 57.6% exceeds Graham's recommended 33% threshold — a rare opportunity.

Negative NCAV — liabilities exceed current assets. Common in capital-return businesses (buybacks, debt-funded dividends) and capital-intensive industries. Not automatically a warning sign..

Conclusion: This stock is better suited for Graham's Enterprising investor — one willing to devote time and skill to security selection.

Showing Key Metrics

Income Highlights

Metric	Q2 2026	Q4 2025
Gross Profit %	57.8%•	N/A
Operating Margin %	33.3%•	N/A
Net Income %	27.4%•	N/A
Diluted EPS	6.10▼	6.28

Balance Sheet Highlights

Metric	Q2 2026	Q2 2025
Total Assets	$2,159.4B	$2,013.3B
Total Debt	$471.8B▲	$412.5B
Working Capital	$147.9B▲	$110.4B
Years to Pay Debt	8.42	7.42

Income Statement

	2026	2025
Tax Effect Of Unusual Items	1,885,274
Tax Rate For Calcs	0
Normalized EBITDA	61,685,000
Total Unusual Items	11,217,000
Total Unusual Items Excluding Goodwill	11,217,000
Net Income From Continuing Operation Net Minority Interest	56,022,000
Reconciled Cost Of Revenue	86,352,000
EBITDA	72,902,000
EBIT	72,902,000
Net Interest Income	990,000
Interest Expense	3,212,000
Interest Income	4,202,000
Normalized Income	46,690,274
Net Income From Continuing And Discontinued Operation	56,022,000
Total Expenses	136,549,000
Total Operating Income As Reported	67,276,000
Diluted Average Shares	9,153,000	9,282,983
Basic Average Shares	9,025,000	9,056,428
Diluted EPS	0	0
Basic EPS	0	0
Diluted NI Availto Com Stockholders	55,872,000
Average Dilution Earnings	-150,000
Net Income Common Stockholders	56,022,000
Net Income	56,022,000
Minority Interests	-1,955,000
Net Income Including Noncontrolling Interests	57,977,000
Net Income Continuous Operations	57,977,000
Tax Provision	11,713,000
Pretax Income	69,690,000
Other Non Operating Income Expenses	-960,000
Special Income Charges	2,909,000
Other Special Charges	-657,000
Write Off	-2,252,000
Net Non Operating Interest Income Expense	990,000
Interest Expense Non Operating	3,212,000
Interest Income Non Operating	4,202,000
Operating Income	68,236,000
Operating Expense	50,197,000
Selling General And Administration	50,677,000
Selling And Marketing Expense	11,869,000
General And Administrative Expense	38,808,000
Gross Profit	118,433,000
Cost Of Revenue	86,352,000
Total Revenue	204,785,000
Operating Revenue	204,785,000

Balance Sheet

	2026	2025
Treasury Shares Number	90,220	85,166
Ordinary Shares Number	9,002,015	9,080,347
Share Issued	9,092,235	9,165,514
Net Debt	246,033,000	211,758,000
Total Debt	471,828,000	412,486,000
Tangible Book Value	907,828,000	876,114,000
Invested Capital	1,588,816,000	1,508,454,000
Working Capital	147,943,000	110,386,000
Net Tangible Assets	907,828,000	876,114,000
Capital Lease Obligations	18,865,000	18,671,000
Common Stock Equity	1,135,853,000	1,114,639,000
Total Capitalization	1,502,524,000	1,436,943,000
Total Equity Gross Minority Interest	1,222,513,000	1,202,849,000
Minority Interest	86,660,000	88,210,000
Stockholders Equity	1,135,853,000	1,114,639,000
Other Equity Interest	-8,315,000	-4,491,000
Treasury Stock	2,180,000	2,288,000
Retained Earnings	1,066,763,000	920,192,000
Additional Paid In Capital	73,692,000	52,346,000
Total Liabilities Net Minority Interest	936,881,000	810,461,000
Total Non Current Liabilities Net Minority Interest	421,400,000	375,350,000
Tradeand Other Payables Non Current	12,252,000	12,801,000
Non Current Deferred Revenue	2,127,000	4,402,000
Non Current Deferred Taxes Liabilities	22,581,000	16,888,000
Long Term Debt And Capital Lease Obligation	380,037,000	335,632,000
Long Term Capital Lease Obligation	13,366,000	13,328,000
Long Term Debt	366,671,000	322,304,000
Current Liabilities	515,481,000	435,111,000
Current Debt And Capital Lease Obligation	91,791,000	76,854,000
Current Capital Lease Obligation	5,499,000	5,343,000
Current Debt	86,292,000	71,511,000
Pensionand Other Post Retirement Benefit Plans Current	31,544,000	24,730,000
Payables	237,348,000	158,342,000
Other Payable	40,567,000	4,153,000
Total Tax Payable	21,202,000	23,688,000
Accounts Payable	175,579,000	130,501,000
Total Assets	2,159,394,000	2,013,310,000
Total Non Current Assets	1,495,970,000	1,467,813,000
Other Non Current Assets	6,131,000	6,479,000
Non Current Prepaid Assets	760,000	11,213,000
Non Current Deferred Taxes Assets	31,553,000	30,004,000
Investmentin Financial Assets	590,596,000	702,856,000
Available For Sale Securities	370,714,000
Financial Assets Designatedas Fair Value Through Profitor Loss Total	219,882,000	207,263,000
Long Term Equity Investment	329,906,000	314,404,000
Investmentsin Joint Venturesat Cost	6,232,000	6,831,000
Investmentsin Associatesat Cost	323,674,000	307,573,000
Investment Properties	965,000	895,000
Goodwill And Other Intangible Assets	228,025,000	238,525,000
Other Intangible Assets	228,025,000	238,525,000
Net PPE	304,838,000	159,593,000
Gross PPE	304,838,000	159,593,000
Construction In Progress	88,205,000	24,076,000
Other Properties	216,633,000	135,517,000
Current Assets	663,424,000	545,497,000
Other Current Assets	56,694,000	45,757,000
Restricted Cash	7,729,000	3,893,000
Prepaid Assets	36,658,000	26,893,000
Inventory	685,000	435,000
Other Receivables	41,980,000	34,912,000
Accounts Receivable	55,606,000	51,315,000
Allowance For Doubtful Accounts Receivable	-5,275,000	-5,016,000
Gross Accounts Receivable	60,881,000	56,331,000
Cash Cash Equivalents And Short Term Investments	461,955,000	380,444,000
Other Short Term Investments	255,025,000	198,387,000
Cash And Cash Equivalents	206,930,000	182,057,000

Cash Flow

📊 Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.

Quarter vs Same Quarter Last Year

YoY strips seasonality

Revenue Growth (YoY)

Prior year: $184.5B ▲ $204.8B +11.0%

Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.

Gross Margin

Prior year: 56.9% ▲ 57.8% +0.9pp

Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.

Operating Margin

Prior year: 37.0% ▲ 33.3% -3.7pp

Graham: operating margin reflects true business economics before financing. Trend matters as much as level.

Net Margin

Prior year: 30.2% ▲ 27.4% -2.8pp

Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.

Quarterly Health Checks

3 Graham/Buffett criteria that are valid and reliable on quarterly data

✅ Adequate Size

Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.

$204.8B/qtr (≈$819.1B ann.)

vs > $1.5B annualised revenue

❌ Financial Condition

Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.

1.29x current ratio

vs ≥ 2.0x

Operating Cash Flow

N/A

Latest quarter · Buffett's cash reality check

ROIC

3.3%

Based on latest annual operating income

Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.

Market Cap / Net Assets

0.4x

Net Assets: $1,222.5B

Asset Context — Internet Content & Information

Platform and internet businesses derive value from network effects, user data, and brand — intangibles that accounting rules don't capitalise. A low or negative Net Assets figure is expected and not a risk signal. ROIC and FCF per share are more relevant valuation anchors.

⚠️ Revenue grew vs prior year but operating margin contracted. Possible explanations: deliberate investment in growth (hiring, marketing, R&D), input cost inflation, or pricing pressure from competition. Buffett distinguishes between spending that builds moat vs. spending that doesn't.

Peers & Industry Comparison

Internet Content & Information — Auto-detected peers

Company	Price	Market Cap	P/E	Gross Margin	Net Margin	Revenue
TCEHY	$55.85	$503.1B	14.74	57.8%	27.4%	$204.8B
GOOGL Alphabet Inc.	$354.97	$4,341.3B	17.8	60.9%	54.8%	$445.9B
META Meta Platforms, Inc.	$741.25	$1,888.3B	27.9	81.7%	29.8%	$228.2B
SNAP Snap Inc.	$5.70	$9.6B	N/A	57.3%	-4.9%	$6.4B
PINS Pinterest, Inc.	$19.36	$11.0B	56.9	79.5%	5.5%	$4.6B

"The management of a business is its most important single factor — more important than market position, patents, or financial structure."

— Benjamin Graham

Capital Allocation & Alignment

Insider Ownership

0.00%

Low — management has little skin in the game

Return on Equity (ROE)

4.9%

Weak — poor returns on equity

Return on Assets (ROA)

2.6%

Fair — average asset utilization

Share Buybacks (Latest Year)

$73.3B

Management is returning capital to shareholders via buybacks

Debt Trend YoY

+14.4% YoY

Debt is growing — management is leveraging up

Leadership Team

Huateng Ma

Co-Founder, Chairman & CEO

Age 53

Pay: $7,245,973

0.013% of net income

Chi Ping Lau

President

Age 52

Pay: $2,477,300

0.004% of net income

Liqing Zeng

Co-Founder & Advisor Emeritus

Age 55

Chenye Xu

Co-Founder & Chief Information Officer

Age 54

Zhidong Zhang

Co-Founder & Advisor Emeritus

Age 53

Pay: $2,409,153

0.004% of net income

Top Institutional Holders

Institution	% Owned	Shares
Henry James International Management Inc.	N/A	86,037
Generali Investments Cee, Investicni Spolecnost, A.s.	N/A	59,908
Trivant Custom Portfolio Group, LLC	N/A	16,664
Cortland Associates, Inc.	N/A	190,852
Raiffeisen Bank International AG	N/A	259,080
Madison Asset Management, LLC	N/A	60,205
Triglav Investments, D.O.O.	N/A	90,465
Rhumbline Advisers	N/A	25,271

Risk Analysis

Beta (Market Risk)

0.74

Low volatility — more stable than the market

Debt-to-Equity

0.39x

Conservative balance sheet — low financial risk

Current Ratio

1.29x

Adequate liquidity

52-Week Price Range

Low: $52.84 Current: $55.85 High: $87.68

Currently at 9% of 52-week range

Tencent Holdings Limited

Metric Explanations

Full Graham Analysis

Income Highlights

Balance Sheet Highlights

Quarter vs Same Quarter Last Year

Quarterly Health Checks

Operating Cash Flow

ROIC

Market Cap / Net Assets

Peers & Industry Comparison

Capital Allocation & Alignment

Leadership Team

Top Institutional Holders

Risk Analysis