Tencent Falls Further as Top Shareholder Looks to Pare Stake
28 Junho 2022 - 1:36AM
Dow Jones News
By Clarence Leong
Shares of Tencent Holdings Ltd. are trading lower for a second
day in Asia after its largest shareholder said it would sell part
of its stake in the Chinese internet giant to fund a share buyback
program.
Tencent shares are down 5.0% at 359.20 Hong Kong dollars
(US$45.77) early Tuesday in Hong Kong, trading near their lowest
closing level in almost a month. The stock has lost about 19% this
year.
Amsterdam-based internet conglomerate Prosus NV, a unit of South
Africa's Naspers Ltd., on Monday said it will start unloading small
numbers of Tencent shares to fund an open-ended share-repurchase
program. Prosus holds roughly a 29% stake in Tencent.
Tencent's Hong Kong-listed shares closed Monday down 1.6%.
Analysts said the share sale is likely to hurt sentiment on the
Chinese tech company in the short term.
The move is "more negative than a regular insider's selling"
because Prosus has walked back on an earlier promise not to sell
more Tencent shares until 2024 and hasn't specified how much of the
stake it will sell, Nomura analysts Jialong Shi and Thomas Shen
said in a note.
"We expect Tencent shares to trade under pressure in the near
term," they added, while keeping a buy rating and HK$455.00 target
price on the stock.
China Galaxy International Securities analyst Mark Po said in a
note that Prosus' plan "may cap Tencent's near-term performance,"
but added that the news is "fully digested." Mr. Po said he has a
constructive view on Tencent partly because messages from Beijing
seem to be turning more positive on the sector. The brokerage keeps
an add rating on the stock with a HK$440.60 target price.
Daiwa Capital Markets analysts also think the share sale will
dampen sentiment, but said in a research note that actual shares
sold could be less than the block trades conducted by Naspers in
previous years. Daiwa has a buy rating on Tencent.
Write to Clarence Leong at clarence.leong@wsj.com
(END) Dow Jones Newswires
June 28, 2022 00:21 ET (04:21 GMT)
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