Tencent Holdings Ltd (TCEHY)

What does it mean for a Canadian investor the fact that they are going to be listed now in Hong Kong? It is great to have where it needs to be. It always helps to be listed in other markets. Having said that you might have some things happening when you are asleep. He likes sideways and this stock has been trading sideways for quite some time. He needs some proof that the stock is not going to comeback form the cliff.

Growth rates are 40-60 percent per year. They have a gaming division. The Chinese use their app instead of credit cards. This should be a smaller position. (Analysts’ target: 522.41).

He still owns it. Fourth largest internet-based companies in the world. It suffered a heathy pullback but long term you will see a company like this with tons of runway. Trading at 38 times earnings with a 25% growth rate which is attractive for a high growth technology company.

The fourth-largest internet company in the word, based in China. The penetration rate in China is half that of the US, so there's lots of runway for growth. They're into gaming and messaging and e-commerce. He continues to like and hold it. Transparency for Chinese companies was a concern 10 years ago, but not today.

The 6^th largest position in his fund. Hopefully you can hold it forever. Everyone in China has it, whereas only half the people in North America have Facebook. WeChat has a payment system and you can sell things over it. They now have a mutual fund license.

A great company, and he continues to like it. It’s basically a Chinese Internet and mobile value-added service type of company with gaming and online advertising services. A lot of their services are really intertwined. The 4th largest Internet Company globally. You are probably going to see well in excess of 30% long-term EPS growth. Forward PE is high at 37%, but if looking at growth rates 35% or higher, you are looking at a PEG ratio of 1.0, which is pretty cheap in the Tech space. Also, they have a much wider audience and a lot more runway than some of the US Internet companies.

A massive company that has only come on his radar recently. A great example of how we can typically have our blinders on and be oblivious to other great companies in the world. He would expect Internet penetration/smart phone penetration in China is probably midcycle, 3rd or 4th inning. Wait for a pullback, and then add to it if it made new highs.

His only issue is that when you buy a share, you are not really getting $.10, you are getting theoretical interest in the ownership of the company. Foreigners are not allowed to buy companies in China, and that is kind of holding him back. A wonderful company and very attractive valuation, but he is nervous about investing his clients’ money in these kinds of companies.

One of the largest Internet companies in China. The largest video game manufacturer in the world. They have WeChat which is like FB-Q but everyone in China has it. It is listed on the Hong Kong exchange and in the US. You will see currency differences. He plans on keeping this stock. He owns it through the Pink sheets in the US. When you buy it in Hong Kong, the commissions are a lot higher.

A great story, and he wishes he were there 5 years ago. However, this is a story that is very expensive, and with everything that is binary in terms of high valuation and high growth, at some point when it comes back, it is going to come back very hard. Very high risk.

This is one of her top holdings. A very well-run company. They have just under 1 billion monthly active users under CHAT. They are also the biggest gaming company. Between CHAT and gaming, that is 65% of their business. They are using their free cash flow to invest in other things, such as the Cloud. They are also the 2^nd largest mobile payment company in China. Valuations are rich, at around 32X earnings, but she is expecting a compounded annual growth rate of earnings over the next 2-3 years of 35%. (See Top Picks.)

One of his favourite tech names. It is the fourth largest internet company in the world. They have a mass market of 930 million people in their chat space. The calculation looks pretty good with a 30-40% growth rate and a 37 PE ratio. He likes this name longer term.

China’s largest Internet service platform. They do things like communication of social networking, chats, and instant messaging. Online gaming is their main growth driver. They do media and online advertising as well. The world’s 4^th largest Internet companies by revenue, behind Facebook (FB-Q), Amazon (AMZN-Q) and Alphabet (GOOGL-Q). Very solid balance sheet. They are sitting on $20 billion US in cash. Dividend yield of 0.2%. (Analysts’ price target is HKD 304.)

She really likes this. It started out as a PC gaming company, but they’ve done a phenomenal job of creating strong IP around games that sustain themselves. Secondly, the Holy Grail for all gaming companies, they figured out mobility. They’ve grown their mobile gaming business tremendously. It is now just half the size of their PC business. Through Re-chat, their chat platform, you can do everything from ordering movie tickets to arrange when to pick up your dry-cleaning. Even though it has performed well, there is still value.

Basically a mobile gaming company in China. Over the years they have built the valuable real estate on their smart phone into a lot of ancillary revenues. However, their core is still gaming. The power of this company’s platform is how they can really use that single piece of real estate and bring content through it. Recently signed a partnership with the NHL to bring it to China, so you can imagine what the potential will be. Another example of how they are able to leverage global content and bring it to a big domestic market is that they acquired a US company called Riot Games, the developer of League of Legends and created their own version called Honour of Kings. Within 11 months, they had 50 million users.