Market performance
Last week, Shanghai Composite Index, Shenzhen Component Index, gem index The media Internet sector index (CITIC) rose or fell by – 0.39%, – 1.06%, – 4.00% and 0.09% respectively. The top ten stocks in the media Internet sector last week: Chengdu B-Ray Media Co.Ltd(600880) , Hubei Radio & Television Information Network Co.Ltd(000665) , Hylink Digital Solution Co.Ltd(603825) , Zhejiang Huamei Holding Co.Ltd(000607) , Lead Eastern Investment Co.Ltd(000673) , Beijing Enlight Media Co.Ltd(300251) , Visual China Group Co.Ltd(000681) , Alpha Group(002292) , Guangxi Radio And Television Information Network Corporation Limited(600936) , Beijing Yuanlong Yato Culture Dissemination Co.Ltd(002878) . The top ten stocks in the media Internet sector last week: Meisheng Cultural & Creative Corp.Ltd(002699) , Shanghai Lisheng Racing Co.Ltd(002858) , Lecron Industrial Development Group Co.Ltd(300343) Shenzhen Zqgame Co.Ltd(300052) 、 H&R Century Union Corporation(000892) 、 Dinglong Culture Co.Ltd(002502) 、 Beijing Hualubaina Film&Tv Co.Ltd(300291) 、 Zhejiang Jinke Tom Culture Industry Co.Ltd(300459) 、 Shenzhen Liantronics Co.Ltd(300269) 、 Shen Zhen Shengxunda Technology Co.Ltd(300518) 。
Main viewpoints and investment suggestions
Tencent reduced its stake in jd.com in the form of dividend distribution, and the draft for overseas listing of enterprises was released
On December 23, Tencent holdings announced that it planned to distribute 457 million shares of JD group to shareholders as an interim dividend by issuing 1 JD share for each 21 Tencent shares. After the dividend distribution is completed, Tencent’s share proportion in JD will be reduced from 17.0% to 2.3%, and it will no longer be the largest shareholder of JD. Meanwhile, Liu Chiping, executive director and President of Tencent, resigned as a director of JD group on December 23. Tencent said it would continue to maintain a mutually beneficial business relationship with JD group through a strategic cooperation agreement.
From the operational level, the reduction has no significant impact on the business layout of Tencent and JD in the short term. Since 2014, Tencent’s development focus in the field of e-commerce has shifted from self operation to strategic investment, enabling the “Tencent system” e-commerce platform by relying on the advantages of social traffic. In March 2014, Tencent first took a stake in JD and subscribed for 15% of the circulating shares of JD with us $215 million. On the one hand, Tencent sold its B2C e-commerce platform QQ online shopping, C2C e-commerce platform paipaipai.com, and Yixun logistics to JD. On the other hand, it opened the primary entrance of wechat and mobile QQ to JD. Up to now, JD’s Gmv in 2020 has exceeded 2.6 trillion yuan, an increase of nearly 10 times over 2014. For JD, from the traffic side, according to the data of questmobile2021, 15% of the users of JD app and 93% of the users of community group purchase platform Jingxi come from wechat applet, Therefore, the continuation of the strategic cooperation agreement with Tencent (currently renewed until May 2022) it is expected that JD will continue to benefit from the wechat traffic ecology. For Tencent, after investing in JD, it took a stake in pinduoduo in 2016 to help it realize the social fission based on wechat traffic. In addition, with the development of wechat applet e-commerce ecology and the gradual exploration of live e-commerce by wechat video, Tencent’s layout in the field of decentralized e-commerce Increasingly mature, so the reduction of JD is not expected to have a significant impact on Tencent’s e-commerce layout.
In kind dividend distribution is in line with the interests of Tencent shareholders, and the investment direction of Internet giants may change. From the perspective of Tencent’s investment strategy, it focuses on investing in companies in the development stage and providing funds for their development and expansion. When the invested company has the ability to raise funds by itself, it will withdraw in time. After more than seven years of cooperation, JD has a mature e-commerce ecology and profitability, and the reduction in the form of in kind dividend is expected to bring rich returns to Tencent shareholders. In March 2021, Tencent’s dividend per share was HK $1.6/share; In this dividend distribution, one JD share can be distributed for every 21 shares, which is about HK $12.4/share based on the closing price on December 24, 2021, which is much higher than the cash dividend, which is in line with the interests of Tencent shareholders. From the industry level, under the trend of peaking Internet traffic dividends, tightening antitrust supervision and steadily promoting the interconnection of various platforms, the direction and intensity of strategic investment of Tencent and other Internet giants may change, so it is recommended to pay attention to it for a long time.
In addition, on 24 December, The CSRC issued the regulations of the State Council on the administration of overseas issuance and listing of securities by domestic enterprises (Draft for comments) And other documents to solicit opinions on the relevant systems and rules of overseas listing. The main contents include the unified filing management of overseas listed enterprises, relaxing the currency restrictions on overseas fund-raising and dividend distribution, At the same time, domestic enterprises that meet the requirements can be listed through overseas indirect issuance (i.e. vie structure) after filing. We believe that the public solicitation of opinions by the CSRC is a further deepening of the reform of “decentralization and service” of Overseas Listing Supervision, helps to build a more stable and clear institutional environment and improve the predictability of overseas listing activities of enterprises.
Risk statement
Industry regulatory policy risk; Industry competition intensifies; Changes in users’ entertainment and consumption habits.
