Alibaba Back on Top with Valuation Surpassing HKD 5 Trillion
Alibaba shares soared today by more than 4%, with an HKD 5 trillion + market value, surpassing Tencent and reclaiming the throne of China's largest company by market value.
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SenseTime, Along with Huawei and Tencent, Joins the 'AI Committee'
On August 6, the national standardization AI group – the AI sub-committee of the Chinese Educational Technology Standardization Committee (CETSC) – held its first conference in Beijing.
Located in the capital city of China, the AI sub-committee comprises 48 members, including academic groups such as China Electronics Standardization Institute (CESI), the Institute of Automation, Peking University, and technology corporations such as Tencent (00700:HK), Huawei, iFlytek (002230:SH) and Alibaba Cloud (BABA:NYSE). The sub-committee is responsible for making and revising the national standards on technology, risk management, products and applications in the AI area.
One of the committee members, SenseTime, has indicated that the company will use its accumulated experience in AI technology exploration and application to promote standardization in the AI industry. As a lead company in a national standardization cooperative on facial recognition, SenseTime has initiated a project about technical requirements for human facial recognition.
Artificial intelligence is one of seven new infrastructures in China. The newly-established committee drawing on data and demand from the masses, will drive and lead the development of the AI industry with supporting regulations and policies in the future.
Tencent Continues to Expand Business in Education
Tencent disclosed its Q2 2020 and 1H 2020 reports on August 12. The financial report data shows that the tech giant hit CNY 30.15 billion in net profit, a year-on-year increase of 28%; the total revenue of CNY 114.88 billion also saw a year-on-year increase (29%).
In terms of communications and social networking services, as of the end of June 2020, the combined number of monthly active accounts for WeChat was 1.206 billion, a year-on-year increase of 6.5%. The latest 'Tickle' (Chinese: 拍一拍) function has stimulated many creative interactions, and the new live broadcast function in the WeChat home-school group has also made online education through WeChat more convenient.
In cloud and other enterprise services, Tencent has expanded its business in new vertical fields such as education to help customers achieve digital transformation. The use of customized design and the establishment and expansion of its own ultra-large digital center have improved the performance of cloud services and optimized costs.
Tencent stated: "Due to the continuing impact of the COVID-19, offline projects have not yet fully resumed. However, we have signed major contracts with financial institutions and public service customers and expanded our medical and education services. Businesses in emerging vertical fields help customers achieve digital transformation. In terms of technology and infrastructure, we use customized equipment and are establishing and expanding our own ultra-large data centers, which will help us to improve our cloud services in the long run."
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China to Raise Issues Around WeChat and TikTok in Next US Trade Talks
Trade negotiators from the United States and China will discuss the progress of their trade agreement in the next few days. Chinese officials intend to bring up Trump's prospective bans on transactions with the TikTok and WeChat apps on national security grounds, according to Bloomberg.
In addition to these two hot topics, agricultural purchases and the dollar-yuan exchange rate will also be discussed. The virtual meeting is likely to be held this week. The date has not yet been determined.
The US President Donald Trump unveiled bans on US interaction with TenCent, the creators and owners of messaging app WeChat. According to the financial reports for the second quarter of 2020 released by Tencent, the combined monthly active users of WeChat and its Chinese version Weixin reached 1.21 billion. Tencent claims that the US revenues account for less than 2% of global revenues, and US businesses account for less than 1% of its total advertising revenues.
The "one area we are engaging is trade," Larry Kudlow, director of the White House's National Economic Council, said at a White House press conference Tuesday. "It's fine right now."
Tencent Backed Game Streaming Huya Reports Net Profit Up 86%
On August 11, Tencent backed China's leading game streaming platform Huya released the financial report of the second quarter in 2020.
According to the report, Huya's total net revenue reached CNY 2,697.20 million (USD 381.80 million), a year-on-year increase of 34.20%. Net income attributable to Huya was CNY 226.80 million (USD 32.10 million), representing an increase of 86.20% from CNY 121.80 million for the same period of 2019. Average monthly active users of Huya Live reached 168.5 million, a year-on-year increase of 17.1%. The total number of paying users of Huya Live reached 6.2 million, a year-on-year increase of 26.5%.
After the financial report was released, Huya CEO Dong Rongjie, CFO Liu Xiaozheng and other executives held a conference call. At the conference, CEO Dong rongjie said that Kuaishou and Biliili had invested a lot in game streaming this year. Still, according to the data, the impact on Huya is not significant.
On August 10, Huya and DouYu said they both received the preliminary non-Binding proposal from Tencent. Tencent is urging merger these two largest game streaming platform to strengthen its game business. Tencent's 'Honor of Kings' became the world's highest-paid game in the first half of this year. The total revenue for this game is estimated to exceed USD1.3 billion on the global App Store and Google Play.
Online Games Help Tencent Smash Q2 Earnings Expectations
Tencent released its financial results for the three-month period preceding June, which exceed analyst expectations. Its total revenues reached CNY 222.9 billion, an increase of 28% over the first half of 2019. On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items, its operating profit reached CNY 73.2 billion, an increase of 31% YoY. The operating margin increased to 33% from 32% last year. Profit for the period was CNY 59.2 billion, an increase of 29% YoY. The net margin increased to 27% from 26% last year. Total cash was CNY 281.1 billion at the end of the period.
Last week, Trump took additional steps in his mobilization against Chinese technology, targeting another Chinese giant in the form of Tencent. Similar to the action against TikTok, the messaging service app WeChat owned by Tencent will be banned, as will any US transactions with Tencent. Those executive orders, released late Thursday, will take effect in 45 days.
However, analysts don't think the Executive Order will have a major impact on Tencent. According to analysts at China Renaissance: "WeChat itself has minimal business and financial exposure to the US – we estimate Tencent's current revenue exposure to the US is less than 3%, with earnings exposure of less than 5%".
Tencent Crushes Q2 Expectations, Cloud Arm Growth Accelerates
Tencent (700:HK) reported its Q2 2020 financials on Wednesday, surpassing the expectations for the period.
Q2 saw a quarterly revenue of CNY 114.88 billion and Non-IFRS net income CNY 30.15 billion.
To break down the figures, the online gaming revenue jumped 12% to CNY 38..29 billion, while the social media and advertisement revenue rose 27% to CNY 15.26 billion. The financial technology segment expanded to CNY 29.86 billion.
Tencent Cloud saw increased demand from Internet companies and public cloud services as the pandemic lockdown was put into place. To pour CNY 500 billion into infrastructure development, it continued to use customized equipment to build self-owned hyper-scale data centers. It keeps attracting customers from finance and government, getting more presence in health care, education and exhibitions.
Gartner (IT:NYSE) recently published its global public cloud market report. Tencent Cloud ranked #5 in 2019 in Infrastructure as a Service, growing at the fastest pace among the top 5 cloud players.
Tencent is pushing the merger of Huya (HUYA:NYSE) and Douyu (DOYU:NASDAQ). The new company would have a market cap of over USD 10 billion with over 300 million Monthly Active Users.
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