Hong Kong · HKEX · 00700
Tencent (00700) stock analysis: valuation and financials
软件服务
HK$421.20 -2.3% Price as of Oct 2, 2026
Wide-moat WeChat franchise: 56.7% TTM gross margin, 25.3% FCF margin, net cash and 14.0x P/E; base case +55.7% upside, bear -33.5% on capex and multiple risk.
- Market cap
- HK$3.8T
- P/E
- 14.0x
- EV/Sales
- 4.2x
- FCF yield
- 5.8%
- Dividend yield
- 1.3%
- 52-week range
- HK$411.80 – HK$677.50
Research as of Oct 4, 2026
Business quality scorecard
- Growth55
- Profitability73
- Cash flow100
- Balance sheet80
- Capital allocation85
- Valuation85
0–100, computed from reported financials; higher is better, and a higher valuation score means cheaper.
How it makes money
Consumers pay for games and digital content, advertisers pay for WeChat/QQ inventory, and merchants and enterprises pay payment, fintech and cloud fees; the company discloses no segment split, but company-level gross margin rose to 56.2% in FY2025 (from 52.9%), consistent with a high-margin games-plus-advertising mix.
Financials by year
| FY2021Jan–Dec 2021 | FY2022Jan–Dec 2022 | FY2023Jan–Dec 2023 | FY2024Jan–Dec 2024 | FY2025Jan–Dec 2025 | |
|---|---|---|---|---|---|
| Revenue | ¥560.1B | ¥554.6B | ¥609.0B | ¥660.3B | ¥751.8B |
| Revenue growth | +16.2% | -1.0% | +9.8% | +8.4% | +13.9% |
| Gross margin | 43.9% | 43.1% | 48.1% | 52.9% | 56.2% |
| Operating margin | 47.3% | 20.0% | 26.3% | 31.5% | 32.1% |
| Net income | ¥224.8B | ¥188.2B | ¥115.2B | ¥194.1B | ¥224.8B |
| Free cash flow | ¥113.0B | ¥95.2B | ¥174.6B | ¥162.5B | ¥190.2B |
| FCF margin | 20.2% | 17.2% | 28.7% | 24.6% | 25.3% |
Amounts in CNY · What is free cash flow?
Margins Gross margin rose to 56.21% FY2025 from 52.90% FY2024 (+3.3pp); TTM 56.66%, Q2 FY2026 57.83%, as gross profit +21.0% outpaced revenue +13.9%. Operating margin rose only 0.6pp to 32.13% (TTM 32.79%) as SG&A +19.3% and D&A +17.4% absorbed gross gains.
- Cash flow HealthyFY2025 OCF CNY303.1B exceeded net income CNY224.8B; DATA cash_conversion 1.47x. TTM OCF CNY305.8B vs net income CNY235.5B, indicating strong cash generation.
- Debt LowNet cash: TTM total debt CNY453.0B vs cash CNY206.9B plus short-term investments CNY252.0B; net debt -CNY5.941B; net debt/EBITDA -0.02x.
Balance sheet Leverage · Net cash
- Cash & short-term investments
- ¥458.9B
- Total debt
- ¥453.0B
- Net cash
- ¥5.9B
- Interest coverage
- 19.5x
- Current ratio
- 1.3x
As of Jun 30, 2026 · Amounts in CNY · How to read a balance sheet
Management and track record
- Management StrongExecution: FY2025 revenue +13.9% to 751.8B CNY, ROIC 17.9% versus 13.0% in FY2022, gross margin up 3.3pp to 56.2%, FCF 190.2B CNY at a 25.3% margin.
Valuation range
Implied value per share · Price when researched: HK$421.20
Each scenario assumes five years of revenue growth, an FCF margin and an exit multiple, discounted to today. The assumptions and sensitivities are in the full report.
The full report also covers
- Revenue, growth and outlook of each segment
- Moat and main competitors
- Key risks
- Capital allocation: where the free cash flow went
- What management promised, and what they delivered
- Scenario assumptions and sensitivities
- A source for every claim
- Ask AI about this company
The full report is for members.