“Dividend-style” sale of Jingdong equity, Tencent investment landscape or will be restructured
2021-12-24 09:15:26Source: Shanghai Securities News
There was no warning beforehand, and it was reasonable.
Tencent, which has a market capitalization of trillions of yuan, suddenly announced a substantial reduction in its holdings and almost completely sold off the equity of its core subsidiary JD.com, and completed the transaction in an “innovative” “one-time” in the form of interim dividends to its shareholders.
Looking at the plan in detail, Tencent intends to reduce the impact of its shareholding reduction on the stock price of JD.com’s secondary market, but the trading motives for its substantial reduction are still on paper, which greatly exceeds the market’s expectations. The underlying logic behind it is thought-provoking.
Someone close to Tencent introduced to reporters that Tencent held an internal event recently, and Ma Huateng’s speech and stance was rather pessimistic.
Since the formal establishment of strategic investment as its core pillar business in 2011, Tencent has invested in nearly a thousand companies, distributed in many fields such as the Internet and technology, and the fair value of its holdings has approached one trillion. Under the dual pressure of supervision and the market, JD’s “Tencent” label has become increasingly weakened. Perhaps after some time, Tencent’s investment landscape will be restructured.
Amazing “distribution-style” reduction
Tencent announced on December 23 that it plans to distribute approximately 460 million shares of Jingdong Group as interim dividends to Tencent shareholders. Qualified shareholders will receive 1 ordinary share of Jingdong Group A common stock for every 21 shares held; After completion, Tencent’s share of Jingdong Group’s shares will fall from 17% to 2.3%, and will no longer be the largest shareholder; Tencent President Liu Chiping will also step down as a director of Jingdong.
According to the announcement, based on the closing price of the Jingdong Group’s Class A ordinary shares traded on the Hong Kong Stock Exchange on December 22 at HK$279.2 per share, the total market value of Jingdong Group’s shares is approximately HK$127.7 billion.
After the news was released, Tencent’s stock price jumped at the opening and closed at HK$461.80 on the 23rd, an increase of 4.24%; Jingdong Group Hong Kong stocks gapped and opened low, once fell below HK$250 to close at HK$259.60, a drop of more than 7%.
As of press time, Jingdong Group has not commented on Tencent’s dividend distribution.
It is so rare to distribute shares of JD Group as an interim dividend to shareholders. Is Tencent going to abandon JD.com?
In this regard, Tencent stated that after the allocation, Tencent is still a strategic partner of JD.com and remains confident in JD.com’s prospects. The win-win business relationship with JD.com will not be affected, and the company currently has no plans to further reduce its holdings in JD.com.
From the perspective of book income, since its first investment in 2014, Tencent has invested in JD.com for nearly 8 years. While JD.com is transforming from PC Internet to mobile Internet, GMV (Total Commodity Transaction) has increased by more than 10 times. Self-made blood.
Are the other Tencent companies “trembling”?
Some market analysts said that Tencent’s move is in line with the current background of anti-monopoly supervision. The reduction of holdings through dividends rather than concentrated holdings will have relatively less impact on JD’s stock price. This should also be a method recognized by the two companies. According to Tencent’s investment logic, there is a high probability that in the future, new tracks will continue to be explored through minority equity investments.
At present, in addition to JD.com, Tencent is also an important shareholder of Internet listing platforms such as Meituan, Tongcheng Travel, Pinduoduo, Vipshop, Station B, and Kuaishou. The shareholding ratios are 17.18%, 21.48%, 15.63%, 9.48%, respectively. 11.38% and 17.32%, and are the largest shareholders of Meituan and Tongcheng Travel.
Will Tencent use JD.com as an example to gradually reduce its shareholding in other companies with reference to this method of dividend distribution. In this regard, the market has a different attitude.
Tencent gave a slightly official statement: “Tencent will continue to support more growth companies and implement long-term investment strategies.”
In the third-quarter earnings analyst conference call, Tencent’s management publicly stated that it will continue to increase strategic investment in emerging industries, while also considering the rate of return on investment and cycle issues. Among them, three areas of business and enterprise services, games and short videos were highlighted.
One signal is that hard technology companies are becoming one of Tencent’s key investment directions. In December of this year, Tencent participated in the 2 billion round A financing of GPU chip research and development company Moore Thread. Prior to this, Tencent continued to participate in multiple rounds of early financing of chip manufacturing company Suiyuan Technology.
Reporter Wen Ting and Editor Guo Chenglin
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