 Good day fellow investors. Can you get rich on Tencent? Well, yes, if you buy Tencent. So today's topic is Tencent. I will analyze the company. What's the company? Give a short company overview, discuss the fundamentals, discuss the risk reward and then discuss what really Tencent is and why it's perhaps important to be exposed to Tencent or at least keep it on watch if the stock price lowers as emerging markets are being oversold. Tencent is the social media company in China. It owns China's Facebook WeChat that has 800 million monthly active users and QQ China's WhatsApp instant messaging app with also more than 800 million users. But the biggest share of revenue comes from online gaming, which is also a big part of this ecosystem. So when you have such a huge base, almost every Chinese person that is online is on those platforms and using that platform monthly. So when you have that, the only thing you can do is leverage those platforms in order to monetize or keep or keep those customers or grow so that nobody thinks of anything else. And that's exactly what Tencent is doing. We can see here how they're partnering from JD, LiU, BitAuto, content, NBA games, Warner Bros, HBO, Call of Duty, games, whatever, music you can do, whatever they're partnering with Google, growing wherever they can because everybody wants to partner with somebody who has 800 millions of subscribers. I wonder if we could get that to that number with this YouTube channel? Never know. However, what's important, still most of Tencent's revenue come from online gaming. We are 41%, but Tencent is not yet monetizing its social platforms as much as Facebook is. So there is one part where the growth might come. Let's take a look at fundamentals and the stock price in relation to the fundamentals, of course. Tencent has been one of the best performing stocks on the planet in the last five years. It is up 700%, 700% in the last five years, which is amazing. Such a surge is thanks to extreme growth the company has been achieving. Of course, if you grow at 50%, 60%, also your stock price will grow at that rate. And this price is very important to see in relation to the fundamentals to see what's the risk and the potential reward. If you look at the income statement, revenues have been up 61%, net profit 69%, non-gap net profit 45%, which are staggering numbers. The current price to earnings ratio is 54.56. 54 might sound high, but for a company that grows 60% is not high at all. If Tencent continues to grow at 60% for the next five years, you will find a company with a price to earnings ratio of 10. So the dividend will be much higher if it stabilizes at that level. However, estimates are that Tencent will grow earnings at 24-25% in the next two years, which is much lower than the current 60%. And now, about the risk reward relation to the stock price, it's all about if Tencent beats estimates, the stock will go higher. If Tencent doesn't beat estimates so gross it's slower than 24%, the stock will go lower. Nobody knows whether it will go higher or lower. Tencent doesn't provide guidance, doesn't give you numbers about anything in the future. So it's very difficult to know exactly what will go and how those internet moves those social networks evolve and work. Competition, everything is very fast, so it's very difficult to really see what's going to happen. However, that's uncertainty, doesn't have to be a risk. So it's a very interesting to dig deeper. Earnings grow for 24% over the next five years, then we would see earnings per share of 2.81 after five years, which would lead to a five-year forward price-to-earnings ratio of 17.79, which would be a very fair evaluation, especially if the company continues to grow. So 20-20% growth might be expected, which means that even at this level Tencent isn't expensive. So perhaps the best strategy, you want to be exposed to Tencent and you want to be exposed to Tencent because of what I will tell you later. So you might buy, I don't know, one-third of your position now, then if emerging markets are sold in this market decline, you buy another third, I don't know, at 35% if Tencent hits those lows, and then you're ready to buy another third at 20. At 20 it would be a price earnings ratio of 20, which is extremely low for the growth, because the business will probably grow even if China slows down, even if there is turmoil in markets in the world and so on. So it's a very delicate situation to balance the perception the market has and what's really going on. And now let's see deeper into Tencent. What's there more than the online gaming and social platforms? We pay. So China's online payment market has been exploding and the whole community is going more and more to e-wallets and mobile payments. And you can see that Tencent's WeChat has 40% of the market and Alipay has 54%. And they are creating a duopoly. They're growing at similar rates, so not much competition interference in a hugely growing market. And what's keyed here? Nobody knows where will this mobile payment market end. If everybody switches to e-wallets, the sky is the limit, especially as the economy grows in the next 10-20 years, nobody can tell you what will happen. It's uncertainty, so the only thing we can look is the risk. So the only thing we can look is the risk. What's the worst, worst, worst, worst case scenario for Tencent? I think a price-to-earnings ratio of 30, 25 with a sharp stock market decline and we might see it at 25, 30, but that's really a long shot. So exposure now might not be such a bad idea. Further, India. Tencent is investing. In India, 700 million Walmart just invested in the e-commerce Indian giant, cab hailing platform, instant messaging, hike, Prakto online healthcare platform. So they're really trying to replicate what they have done in China now in India. So they might go from 800 million users to 1.5-2 billion users. Those numbers are staggering. It's impossible to put them in a model. Those that growth is impossible to put in a model. So it's really only about what's left is they want to be exposed, yes, then buy it and be ready to buy more if the stock drops and enjoy the upside if there will be. In the long term, probably there will be. Nobody knows that. So it's an uncertain investment in the future. But it gives you exposure, which is very important to have even if the future is uncertain. The future is always uncertain. Tencent also owns 12% of Snapchat so that they try to sell their online games to Snapchat users in the US. Further, it owns 5% of Tesla. What are they going to do with that? You never know. I will finish with some food for thought. Tencent has a market capitalization of around 500 billion and it has 800 million monthly active users, which means that each user is valued now from the market at $625, which is 625. Yes, if everything turns online, it might be interesting. So you have to see there, okay, how much are people paying per year? However, the key is each user is already profitable to Tencent and Tencent is earning about $14 per user. So if they can double it to 25 and then double it again to 50, then surely each user is worth $625. So just some food for thought to give you some perspective. Looking forward to your comments on Tencent, any other questions that I might help, I'm always glad to answer. I always love your comments. So thank you for watching. Thank you for commenting and I'll see you in the next video.