Tencent is really worth?

cloud network hunting note: Internet company tencent in the Hong Kong stock exchange listed in 2004 when the market value of billions Hong Kong dollars only. In 2014, its market value has breakthrough 1 trillion Hong Kong dollars. This paper analyzes the growth of the tencent business development prospects, and the tencent platform value and the value of online consumer valuation are given. Tencent’s market value is equal to the value of the “platform ($35 billion),” and “may share the value of online consumer ($135 billion),”, for $170 billion.

author: xiao-yun peng, zhang wei source: “tsinghua financial review

today, you “micro letter”?

tencent holdings co., LTD. (hereinafter referred to as the “tencent”), a simple and honest and body slightly fat penguins, QQ month of 825 million active users and more than 396 million active users micro letter month let the brand is known around the world. Today, the development business, large Internet of each type of product has almost touch.

in recent years, tencent started around strategy. From “penguin empire” to “tencent federation” era, tencent has always resources “enclosure” fast, expanding its territory. As the “platform” mode of Internet value-added services into mature, tencent platform strategy to “open platform”. Once the “public enemies” open is accelerating.

tencent’s Internet financial strategy: open platform

in tencent’s social as the concentric circles to build a huge business empire, ali and baidu are grazing land in the field of electricity and search respectively, the three formed the three big Chinese Internet giant, BAT.

nowadays, layout of the Internet financial become the consensus of many Internet companies. Tencent, relying on the platform effects, the payment system and the advantage of the financial scene, and ali and form two industrial chain. Tencent’s Internet financial strategic foothold is to build ecological system, to build a large platform, let the market parties involved, eventually share Internet financial lords.

unlike ali into the Internet finance: from opening WeChat payment, apply for establishing a private bank to the established joint alibaba and ping an insurance company, tencent the layout has been involved in the field of financial payment, funds on a commission basis, insurance, small loans, and even private banking innovation. Tencent has a huge user groups become Banks, funds, securities, insurance and other financial institutions to cooperation.

the difference between tencent and ali: open versus closed

tencent and ali is Internet financial two camps: the “social + electricity + financial” VS “electrical business, social and financial.” Ecology, as a result of two giants in the Internet financial significant differences and the whole industry chain layout.

on the ecosystem, tencent started in social, around the “user growth + products rich” big social policy for tencent natural temperament with open. Ali started in the electrical business, logistics, information, capital, natural has closed properties. The underlying ecological differences lead to two big differences on Internet financial “play”; On the technique of operating, tencent as open platform, provides the financial products are from partners, and ali as a closed system, the layout of the financial business tend to require control on equity; On the layout focus, tencent into the financial sector is more aimed at the existing user value to mining. Based on user attributes, tencent the future focus will give priority to dozen of direction is to standardize the financial products, such as Internet banking, securities, Internet virtual credit card, etc. Ali building is closed trading platform, provide trading link in derivative financial services is the focus of the future, as a result, banking should be ali’s top priority. In trading closed loop, ali has carried out a similar bank “deposit, loan, transfer business.

, by contrast, tencent industry chain is more open, harmonious. Tencent’s Internet financial strategy and business model of tencent change text: ecological system from closed to open, that is firmly held the Internet all kinds of entrance at the same time, with external third-party strategic cooperation in business level, do their job, for the value of the stock of tencent users to dig again. Build ecological system, and build win-win cooperation, open platform, and the traditional financial institutions is tencent’s Internet financial strategy advocate fundamental key. Specific tactical, tencent will further enhance the user experience, improving the pay system, build the financial scene.

micro letter: commercialization tencent open

marked by micro letter version 5.0, micro letter has entered a new stage of development, from a relatively simple mobile social entrance into the ecological system of the core. Micro letter access to pay, introduced the gaming platform, increasing the electricity, lottery tickets, tickets to the theatre, financial services, at the same time, classification management to the public in order to protect the user experience. This marks the beginning of commercialization WeChat (figure 1).

in is regarded as the focus of the mobile Internet commercial game and O2O WeChat 5.0 successfully built the game and O2O two entrances, and bring WeChat solve payment link, so as to complete the closed-loop mobile Internet business.

the value of the micro letter platform

WeChat of commercialization are not just combine with electricity, mobile game, is expected to WeChat commercialization for tencent increased at least 25% of the income. In March 2014, tencent with $180 million purchased from e-house fully diluted 15% of the shares, the extension of the O2O to real estate.

late June 27, 2014, tencent in the Hong Kong stock exchange announced that the disclosure of information website has 58 city $736 million acquisition of a 19.9% stake in the company. Tencent deals become 58 city’s second-largest shareholder, the first large institutional shareholders, 15% of voting rights. This is tencent the investment in February 2014, the local consumption of travel in local services in the field of strategic attack again. Also show that tencent WeChat commercialization after represented by game entertainment, represented by the media after WeChat public account, is approaching the third step, with the ticket, delivery, order a meal, group purchase, take a taxi services in the areas of local life, especially similar to tutor, move, rent and other highly actually need the integrity of the social relations and service, this is the most ideal ecological WeChat commercialization.

unlike value-added service users to make money, public service platform is the micro letter “merchants money”. This is a communication platform between the merchants and users. Future tencent will seek public platform of benchmarking in the various key industries, such as aviation, finance, insurance, banking, funds, operators and education industry is directly related to the user. Once the user has formed the habit of use WeChat find service, then WeChat can take advantage of the platform “thrust a foot” in all walks of life, to magnify the enterprise value of the tencent company.

micro letter commercialization prospects

micro letter envelopes to fame, make numerous user binding overnight bank card; Traditional car hire business (drops a taxi); Mobile phone QQ4.6 low-key launch voice; Tencent wide point through testing the waters WeChat public commercial; Tencent WeChat overseas edition WeChat and the Google cooperation greatly expanding the market; CMB notice below 300 yuan trading no longer send text messages to inform, WeChat it every pen notice… This a few small events reflect the micro letter to pay, instead of calling, commercialization and internationalization progress. The future of the micro letter in business with the following:

it is a reverse operators. Micro letter a message has been basically replace text, text messages, not just individuals include enterprise messaging. Operators of large customer business, telephone communications business or will be gradually replaced.

2 it is to change the electricity industry. Tencent will WeChat reversing in the backward situation of the electric dealer market, the future will be in mobile shopping market. Especially after WeChat payment progress, WeChat all offline businesses will be pushed to 400 million users. Users search near by WeChat merchants, and then choose their own goods and services, to merchants consumption after payment.

3 it is to enter the financial industry. WeChat have online banking, equity insurance, with sinolink securities strategic cooperation, has free software, set up the network of small loan companies, invested in everyone to borrow the parent company. Using tencent’s financial full licence layout, WeChat funds precipitation of deposit, the future can do WeChat credit card – personal consumption credit funds and other financial products, to sell goods on a commission basis, even a lot of our business.

all this, one of the important strategic fulcrum is the micro letter to pay. With the small letters and QQ hundreds of millions of users, tencent has huge advantage in mobile terminal. From WeChat pay online, sogou action can be seen, such as the perfection of tencent’s online and offline platform with commercialization in rapid advance. At present, how to put the good social attributes better combine with financial business, tencent be solved the problem.

tencent’s current business development focus still focus on the user experience. Expect WeChat development key is still trying to expand the customer base. Shenyin wanguo report predicts WeChat is expected to become the channel control in the future the strongest trinity mobile Internet portal, namely mobile gaming platform, electrical business online to offline (O2O) entry, and application software development platform (APP). With the continuous development of micro letter, tencent’s position on the mobile end also will continue to strengthen.

the most frequently used in industry product, with comparison to micro letter before the implementation of blowout growth weibo, both has the rich business model development space and the commercial application potential. For now, only WeChat application products gradually rich, and WeChat as mobile Internet products, highlighted the advantages under the trend of mobile Internet gradually, has more development space.

tencent valuation

from the perspective of profit margins, recent quarters, tencent’s operating margin and net interest rates fell, as the main source of profit games business whether industry growth, or market share, have been into the “bottleneck”. On the one hand, due to more than 800 million QQ users have been really hard before the high growth, so the income growth also is slowing, and most of the value-added services and micro letter for r&d and extension of cost also is significant. From the perspective of the development plan of tencent, value-added services and its the main source of business and profit, to enter the Internet financial start with WeChat pay, now is still in the cultivate the habit of users use WeChat pays, in a short period of time is difficult to form the profit point.

however, WeChat profit potential is tremendous, from WeChat gradually replace text, change pattern of mobile game industry, financial industry, involving the media to take a taxi, lottery tickets, tickets, and so on field, believe that the mobile Internet will become the most effective tools for tencent the core of the future.

the industry brokerages to tencent’s valuation of the biggest differences in WeChat, brokerage, valuation range of WeChat platform in the $30 billion to $64 billion. Lyon estimate micro letter asset value will rise to $92 billion by 2017.

huatai securities according to the report, tencent antenna has or is about to all aspects of life to the residents, the value of it is WeChat, QQ as a social tool platform value plus the value of the residents may share can be consumer spending.

social platform value: $35 billion

at the beginning of 2014, Facebook announced acquisition of WhatsApp for $19 billion in cash and equivalents. WhatsApp is a based on the mobile end chat tools, can be seen as the European and American version of the WeChat, but it is more pure chat tools, without advertising revenues, annual fee is $0.99, Facebook when WhatsApp, WhatsApp monthly active users for 430 million. Such as Facebook for WhatsApp valuation as user platform built by the value of the tencent QQ and WeChat the same social tools platform value of globalisation is the $35 billion [tencent earnings data, QQ on the active users of about 800 million people; WeChat/WeChat to 396 million people, conservative assumptions both user overlap, namely, tencent as a social tool monthly active users for 800 million people, 350 190 x (8/4.3)].

online consumption value: $135 billion

tencent started with social tools, and then find the gross margin higher cash tools – game, in recent years, the development will be tentacles into the broader field of individual life, this phenomenon is not limited to tencent, ali, baidu, and other Internet giants, they share in the future will be the whole online consumption.