Tencent to buy back 10% of shares to shore up stock price

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Tencent to buy back 10% of shares to shore up stock price

Tencent Holdings, operator of China’s biggest social media and video gaming business, has proposed to buy back 10% of its shares in a bid to shore up its share price.To get more technology news in China, you can visit shine news official website.

The company, which has the biggest weighting of 9.9% on the Hang Seng Index, said in a filing to the Hong Kong stock exchange that the repurchase is subject to shareholder approval during the annual general meeting on May 15.

The Shenzhen-based company currently has a total of 9.52 billion shares in circulation.

Shares of Tencent closed up 1.1% at HK$365 (US$46.5) per share on Monday.Tencent’s shares have been a beneficiary of a rising Hong Kong market, which entered bull territory on Monday. The Hang Seng Index rose 1.8%, taking its overall gains to 20.2% since a recent low in October.

Tencent’s shares have risen nearly 45% since October 30 when it was trading at HK$252.20 (US$32.13).

This year alone, it is up more than 16.2%. But it remains 23% below its all-time high of HK$474.60 (US$60.46) reached on January 23, 2018.

“The buy-back will spur a rally in Tencent’s stock price as it shows the management is confident in the company’s fundamentals and has strong liquidity to support the move,” said Norman Hui, a Hong Kong-based analyst with Zhongtai International Securities.The shares of the Chinese internet giant have had a roller-coaster ride in the past 14 months, powered by its revenue-generating video game business and ubiquitous WeChat super app before a much-chronicled government crackdown on content and gaming wiped out almost half the company’s value by October.

The mainland authorities had halted video game license approvals for nine months until December 29, 2018.

The previous time Tencent did a buy-back was in September 2018 when it spent HK$887 million (US$113 million) on 2.85 million shares.

In a separate exchange filing, Tencent said it would raise up to US$20 billion through a medium-term notes program, up from US$10 billion announced previously.

On March 21, Tencent reported a net profit of 14.2 billion yuan (US$2.1 billion) for the December quarter, and a 10% increase in full-year net profit to 78.7 billion yuan (US$11.7 million), both of which missed analysts’ estimates.