Why is it Trading below its Net Tangible Book Value?   We feel that there were two key reasons why the market was pricing Hongkong Land at such levels.

• Hong Kong's property market was facing some headwinds.⁸
• Market participants looking at the company from a dividend yield perspective. In early 2017, the company had a dividend yield of 2.78%,⁹ below the market average of 3.26%¹⁰ and 3.04%¹¹ for the Tracker Fund of Hong Kong and SPDR Straits Times Index ETF respectively.

The Hong Kong property market saw huge price appreciation from 2009 to 2015.¹² Only in the beginning of 2016 did prices start to decline.¹³ It seemed at that time that the fundamentals were not looking great for the Hong Kong economy.¹⁴

Even with all that being said, Hongkong Land still owns some of the most prime commercial properties in the central business district of Hong Kong, all strategically located in the Central district of the city. Due to its prime location, these properties might be more defensive in nature in terms of rental and value.

To address this concern, let us assume a “worst” scenario, in which all of Hongkong Land's Hong Kong investment properties in 1H2016 fall by 30%, meaning that the carrying value of these properties decreases from US$25 billion to US$18 billion,¹⁵ translating into a drop of US$7 billion in value. If we account for that drop, the equity value of the company would fall from US$30 billion to about US$23 billion, or about US$10 per share.¹⁶ During December 2016, Hongkong Land hovered about US$6.30 per share. This meant that our estimation of the company’s intrinsic value, which was based on a rather pessimistic assumption of Hong Kong's property market, was still at least 50% higher than its then-current share price.

Now, to address our second concern, is the market valuing the company at such levels because of its dividend payout ratio? From the nature of its operations and assets, we cannot discount the possibility of market participants valuing the company from a dividend approach. And with Hongkong Land's dividend yield lower than both the Tracker Fund of Hong Kong and SPDR Straits Times Index ETF, this might be a valid concern.

Is there a Catalyst in the Future for the Company to be Fully Valued Again?    As a catalyst, an increase in dividend pay-out could be just what the doctor ordered.

For such an event to take place, it depends on both the capability and the willingness of the company. So how did Hongkong Land fare on this issue?

We will first approach this by considering Hongkong Land's capability. For most real estate investment-based companies, a significant part of their earnings is derived from the revaluation gains of their investment assets. Hongkong Land is no different. Note: Revaluation gains are paper profits and do not show the true earnings potential of the company from an operational level. Thus we should make certain adjustments to get a better picture of the true earning potential of the company.

From the chart in Figure 9.1, we can see that Hongkong Land's core operational earnings were greatly skewed based on the revaluation gain or loss on that year.

Next, we move on to see how healthy their balance sheet is. A key concern for companies in capital-intensive industries is the irregular nature of their free cash flow – in other words, their dependence on debt. However, with Hongkong Land's total borrowing to shareholders' funds at just 13%,¹⁸ we do not view this to be an issue.

With their capability settled, we will move on to gauge the willingness of the company. And the only way we can do this is from the track record of the company.

After plotting Hongkong Land's shareholders' dividend against its core operational earnings (Figure 9.2), it was clear that the average pay-out ratio for the last decade was consistently at a comfortable level of about 50%.

To conclude, as an outside observer, it appears that the company has the capability to increase its dividend level.

If Not, Can it Continue to Grow its Book Value in the Future?    Based on the historical track record of the company, it has been able to grow its book value very successfully. Its net asset value per share increased from just US$4.76 in 2006²⁰ to US$12.19 per share in 2015.²¹

That translated into a compounded annual growth rate of 11%. Furthermore, this was achieved with just a relatively conservative debt level. Looking forward, the company has also entered many growth markets such as Southeast Asia and China to diversify away from its business concentration in Hong Kong. These markets might fuel the growth of its book value going forward.

Looking Hongkong Land’s investment pipeline, it does seem that Hongkong Land will be able to continue to build its asset base for many years to come.

What Are the Risks?    Over the short term, the volatile market conditions in Hong Kong together with the slowdown in Singapore's property scene might put some pressure on the company's ability to grow. As Hongkong Land is highly concentrated in these two markets, any decline in rental yield or property value in these two countries would directly impact both the revenue and book value of the company.

Over the longer term, the challenges that are facing Hong Kong as a financial hub might stagnate its economy. Hong Kong used to be the gateway to mainland China. However, as China is opening itself up to the world, the need for businesses to use Hong Kong as a transit point might be reduced greatly in the future. The opening of a free-trade zone in Shanghai and the liberalisation of its currency and financial markets might reduce the importance of Hong Kong. If that happens, the growth for the company within Hong Kong would become very limited.

The shareholder and management structure of the company is also a concern. Even though slim, there always exists a possibility that the major shareholders interest might put minority shareholders at a disadvantage in some decisions. Although such instances are not common in the past, it is still a risk we have to think about.

Proxy for the China Consumer Story    As one of the leaders in China's food and beverage industry, Tingyi Holdings is a proxy for the China consumer story. Given its huge size and market share, it might be considered as a mature business. Yet there might still be growth, albeit slower than fast-growing technology companies. The company’s chairman, Wei Ing-Chou, mentioned when the company was founded that the Chinese on average ate five packages of noodles per year. In 2011, that number was 30. At the same time, the price of each package of noodle has increased. In the next 20 years, he predicts that it will double.²⁹ And for the potential of beverage operations in the Chinese market, we leave you with an extract of a 2012 press release, with PepsiCo Chairman and Chief Executive Officer Indra Nooyi highlighting that “China will soon surpass the United States to become the largest Beverage market in the world. As a result of this new alliance with Tingyi, PepsiCo is extremely well positioned for long-term growth in China”.³⁰

Instant noodles are not new technology untested in the market. Many mature economies have seen the rise of the popularity of instant noodles in the past. Therefore, urbanisation and modern retail channels should benefit Tingyi even more.

52-Week Low Share Price    The last time Tingyi Holdings saw a market capitalisation of about HKD40 billion (USD5 billion) was way back in 2006.³¹ In 2015, its revenue was 290% higher; its shareholders' profit was 72% higher and its shareholders' equity was up by over 200%.³² And 2015 was considered a bad year for the company.

Hong Kong-listed consumer staples like Want Want China Holdings Limited, Tingyi Holdings and Hengan International Group Co. Limited were three of the four most shorted stocks on the Hong Kong benchmark index back in July 2016.³³ The story behind this was that consumers are reportedly showing a preference for healthier food. In just six months from January to June 2016, Tingyi Holdings' market capitalisation fell by almost a third, to a price level not seen since 2006. To place things in context, its share price was down more than 70% from its peak in 2011.³⁴

Possible reasons why the company's share price tanked:

• previously traded at a rich valuation
• transition phase with the first non-family Chief Executive Officer appointed in 2015³⁵
• operational issues in its core operations.

However, these issues were not structurally damaging. Tingyi was still:

• cash-generative – the company was still very cash-generative. Furthermore, the company was operating with a negative cash conversion cycle. This means that they are getting paid by their customers before they had to pay their suppliers; a nice business model
• the market leader in China's instant noodles and RTD tea market (2016) – 52% of instant noodles (sales value) and 43% of RTD milk tea (sales value).³⁶

Additionally:

• Tingyi Holdings has a long and proven track record.
• The integration with PepsiCo China was slowly settling – lower integration accounting charges (reduction in termination benefits).³⁷
• Most importantly, already has the infrastructure and network in place – a huge asset for the company.

Barriers to Entry – Distribution    Competition Demystified by Bruce Greenwald is a great book on moats.³⁸ In the book, the rule of thumb in identifying whether barriers to entry exist in an industry involves looking for the existence of these two points:

1. stability of market share among a handful of competitors, with a dominant firm
2. profitability of the companies.

We already know that Tingyi Holdings is the market leader in China's instant noodles and RTD tea markets. Moreover, in the instant noodles and RTD tea market, the market share among the top three to four players is relatively stable. The top four players in both the instant noodles and RTD tea market in China have consistently made up over 80% of the market share, a sign of high barriers to entry.³⁹ And as the biggest bigger player in both markets, Tingyi was the elephant in this room. Together with its closest competitor, Uni-President China Holdings Limited, these two companies had a duopoly-like hold when it came to instant noodles and RTD tea operations. To further strengthen its position, Tingyi, with its newly integrated PepsiCo operations, is now dominant in three of its key operations.

Other than its products (some might say a drink is a drink is a drink), the key advantage Tingyi Holdings had was its massive distribution capability. Back in 2011, Tingyi Holdings' Chairman Wei Ing-Chou even mentioned that the company thrived on distribution.⁴⁰ In the mass-market consumer product industry, owning the market looks to be more important because:

• Barriers to replicating consumer staple products are not that high.
• It is far more difficult to develop a strong nationwide distribution and production network.

As market leader, Tingyi Holdings could leverage on their scale and research and development efforts to launch products that are popular in the market, and use the company's distribution reach to their advantage. In addition, the PepsiCo alliance added a whole new dimension to things. More PepsiCo products could lead to more shelf space. And with Tingyi Holdings' extensive distribution network, distribution of more products should not be an issue. A virtuous cycle.

Economies of scale depend on the ability to spread out fixed costs and with the manufacturing process. Therefore, Tingyi has a tangible competitive edge in their much-heralded distribution network:

• Advertising and promotion: Dollar for dollar, if Tingyi spent the same percentage of revenue, they would outspend their competitors and have a wider audience to address.
• Distribution: Water is heavy to transport and expensive to deliver; the more customers in a given region, the more economical it is for the company per unit of goods.

Tingyi's strategic alliances also brought advantages in the field of research and development (“R&D”). With PepsiCo alliance, a global perspective was brought into the room. With PepsiCo's new Shanghai R&D centre, the largest outside North America catering to the entire Asian region, Tingyi can tap into PepsiCo's expertise to boost its product offering.⁴¹

The Partner of Choice    Sanyo Foods Co., Ltd., Asahi Breweries Limited and Itochu Corporation are three of the largest global food and beverage companies. What do they have in common? Before it was cool, these three Japanese firms followed the same strategy to ride on the China consumer story – they all invested in Tingyi.⁴² We know Berkshire Hathaway as the company people come knocking on the door of when they want to divest. In Tingyi Holdings' case, they looked to be the go-to company for the distribution of consumer goods in China. So why did PepsiCo decide to partner with Tingyi Holdings?

It might be due to Tingyi Holdings' 598 sales offices, 71 warehouses, 29,985 wholesalers and 115,435 direct retailers in China (2016).⁴³ This was also huge enough to attract other players like Disneyland and Starbucks to join the partnership. With PepsiCo, a huge beverage player themselves, this deal demonstrated the strength of Tingyi Holdings. Many multinational companies invested and failed to make meaningful profits in China. This was the case for PepsiCo as well. Instead of continuing to invest money into China, PepsiCo essentially decided, if you can't beat them, join them.

Disneyland's landmark arrangement to get beverages from Tingyi-PepsiCo was just the tip of the iceberg. In 2015, PepsiCo became the exclusive food and beverage sponsor of the NBA in North America – upending the long-standing arrangement the NBA had with Coca-Cola.⁴⁴ Basketball is a big thing in China and guess who became PepsiCo's beverage partner in China. In 2015, Tingyi Holdings became the NBA's partner in China through the Master Kong brand, a slam dunk for Tingyi Holdings.⁴⁵

Normalised Earnings    We can use a normalised earnings method to value Tingyi Holdings. Some of the assumptions are:

• Instant noodles net profit = US$300 million
  • revenue of US$4 billion
  • instant noodles operating margin = 10% (five-year average: 10%)⁴⁷
  • operating profit = US$400 million
  • financing cost = US$0 (three-year average = ~US$0 million)
  • tax rate = 25% (statutory rate in the PRC).⁴⁸
• Beverage net profit = US$50 million
  • revenue of US$6 billion
  • beverage operating margin = 3% (five-year average: 4%)
  • operating profit = US$180 million
  • financing cost = US$50 million (three-year average = US$36 million)
  • tax rate = 25% (statutory rate in the PRC)
  • as Tingyi owned 47.51% of Tingyi-Asahi Beverage Holding Co., Ltd⁴⁹ (investment vehicle of the Group that holds the Group's beverage business in mid-2016),⁵⁰ Tingyi Holdings is only entitled to its proportional share of earnings from the beverage business.
• Other assumptions:
  • instant foods breakeven
  • no other income
  • no contribution from associates.

We would then arrive at a shareholders' profit of about US$350 million.

At market capitalisation of US$5 billion, Tingyi was valued at 14 times our estimated earnings in mid-2016.

Tingyi-Asahi Beverage Holding Co., Ltd (“TAB”) Valuation    As part of the strategic alliance, PepsiCo has a call option to increase their indirect stake in TAB from 5% to 20%. We will look at this through the lens of PepsiCo. The exercise price is based on a US$15 billion valuation of TAB if this option was exercised in 2013. This valuation would increase 15% annually until 2015, translating to a valuation of US$20 billion for 100% of TAB. ⁵¹

From how we looked at it, this valuation seems to be on the rich side.⁵² Given the reduced profitability in its beverage operations in recent years, we could take a wild stab and apply a 70% haircut to Tingyi Holdings’ diluted stake of 40% in TAB. This added up to about USD2-3 billion.

With just 10 times P/E the company’s cash cow of its instant noodles arm, a value of US$3 billion was estimated. In total, Tingyi Holdings' instant noodles and beverage arm could possibly be estimated at US$5-6 billion. In June 2016, Tingyi had a market capitalisation of US$5 billion.

Share Repurchase    In 2015, Tingyi Holdings repurchased 1.2 million of their shares at an average price of HKD13.84, the first such exercise in at least the past five years. This was when the company had a market capitalisation of over HKD70 billion (US$9–10 billion). In June 2016, Tingyi had a market capitalisation of US$5 billion.

Operational and Financial Efficiency    Other than having economies of scale, commodity operators must be efficient. Simply put, companies with high yield and a low-cost base are qualities of a well-managed upstream operation.

For productivity, let us start from talking about the fresh fruit bunches (“FFB”) yield. FFB is the term used for the harvested fruits of an oil palm plantation. FFB yield refers to the fruits produced on a per hectare basis, measured in tonnes per hectare. For landlords, a measure of productivity is the occupancy rate, the higher the better. This concept also applies to FFB yield. In our opinion, a five-year record is a decent timespan to get an idea of how good a company is at planning, planting and harvesting its plantation. Given that these plants are in their ecological sweet spot, their yields shouldn't stray too far from the average.

Additionally, we must also consider the age profile of the estates. For instance, an estate with trees in their prime yielding 20 tonnes/hectare per year is decent. On the other hand, an estate in its prime only delivering 15 tonnes/hectare may not be ideal. The thing about palm oil cultivation is that its yields are rather consistent and, notwithstanding bad weather conditions, good practices tend to lead to sustainable results. But on the other hand, a mistake like poor planting could lead to years of regret; once the tree is in the ground, you have to wait for another 25 years.

From First Resources' FFB yields in Table 9.4, it looked to be a company with “good practices and sustainable results”. From our analysis, much of its drop in production post-2012 was attributable to unfavourable weather conditions, new mature areas and acquisitions of external poorly managed plantations.

The second thing we look at when analysing a palm oil producer is its cost structure. In this business, it definitely pays to be a low-cost producer. Generally, the larger the planted area and the higher the productivity, the better you are able to spread out your fixed costs. At its core, productivity in the palm oil plantation industry is measured in terms of its FFB and CPO yield. For instance, 10,000 hectares with FFB yield of 20 tonnes/hectare could yield about 200,000 tonnes of FFB in a year. If the same 10,000 hectares yielded only 10 tonnes/hectare, you might only end up with 100,000 tonnes of FFB. Yet, from a fixed-cost point of view, these 100,000 tonnes of FFB cost you much more, given that your cost of operating the estate is about the same in both cases. We focus on FFB because if a company takes good care of their upstream, the rest should fall into place.

In 2015, First Resources reported a unit cash cost of CPO nucleus production of US$204/tonne on an ex-mill basis.⁶⁵ At the lowest point in the past five years (2012–2017), monthly CPO prices were in the range of US$450–500/tonne.⁶⁶ Even if we took the entire operating expense, we estimate operating cost to be below US$450/tonne. Note: Always remember production cost per tonne is based on the tonnage.

Management and Structure    When we analyse the management, we like to see “management walking the talk”, meaning that they consistently deliver on their targets. For upstream palm oil operators, one way to look at this is from their plantings schedule. We can view it from the perspective of their planted area targets and age profile.

In their 2012 Annual Report, First Resources aimed to expand through new plantings of 15,000 to 20,000 hectares per year, with a target of 200,000 hectares of oil palm within the next five years⁶⁷ (around 2017–2018).

At the rate First Resources is going (Table 9.5), they look to be able to achieve 200,000 hectares of planted area from just their nucleus plantings. From their track record, First Resource's planting game looked strong. In 2016, First Resources reported a weighted average age of nine years, and a balanced age profile in all four stages (Immature: 29%, Young: 27%, Prime: 23% and Old: 21%)⁶⁸ showed good planning by the management.

Next, we also need to pay attention to the company's structure, the more straightforward the better. We compared the company structure of First Resources to two other Singapore-listed oil palm companies. Looking at their non-controlling interest to total equity in 2015, Bumitama Agri Limited, First Resources and Indofood Agri Resources Limited reported 8.6%,⁶⁹ 4.8%⁷⁰ and 40.7%⁷¹ respectively. In Indofood Agri Resources Limited's case, this meant that 40.7% of the Group's assets do not belong to its equityholders.

Among the three, First Resources looked to have the most straightforward structure. In Indofood Agri Resources Limited's case, they had a significant portion of non-controlling interest as they were required to consolidate non-wholly-owned entities like their 72.6% stake in their publicly listed subsidiary Indonesia-listed PT Salim Ivomas Pratama Tbk. As the financial statements of a company with high non-controlling interest might be challenging for investors to understand, we prefer companies with a straightforward structure, because, as minority shareholders, it is always good to keep things simple.

Commodity Prices    For a commodity producer, there are two main ways of increasing its revenue:

• controllable factor – increase in production
• uncontrollable factor – increase in the underlying commodity prices.

As we explained in the previous section, First Resources was actively expanding its production. Therefore, we will devote this section to the uncontrollable side of commodity linked companies. No matter how one spins this tale, companies involved in the commodities business are always exposed to the price effects of the underlying commodity.

Here was how the average monthly CPO price looked from 1996 to 2016:⁷²

• 1996–2000 = USD439/tonne
• 2001–2005 = USD362/tonne
• 2006–2010 = USD701/tonne
• 2011–2015 = USD817/tonne.

Considering just the period from 2010 to 2016 alone, monthly CPO prices fluctuated between US$483 and 1,249/tonne.⁷³ Although no investors can accurately predict CPO prices consistently, we still do need to understand the supply and demand relationship for CPO prices. But why?

Think of the underlying commodity price as a multiplier for a commodity producer. Just for illustration, assume you need $1 to produce 1 tonne of CPO. Taking all things as constant, if 1 tonne of CPO can fetch $2, your profit would be $1, giving you a profit margin of 50%. On the other hand, if the price of CPO is $3 per tonne, you would arrive at a profit of $2 or a profit margin of 66%!

Although we are unable to accurately catch the bottom, there are price levels we felt comfortable with. Back during late 2014 to early 2015, CPO prices caught our attention when prices fluctuated around US$500/tonne. However, our consideration was based on other more reasonable factors that pointed towards prices bottoming:

• New plantings in the industry appeared to be slowing down
• Higher-cost players were under pressure at these price levels
• Recent consolidation among key industry players:
  • Sime Darby Berhad's acquisition of New Britain Palm Oil Limited⁷⁴
  • Felda Global Ventures Berhad acquisition of Asian Plantations Limited⁷⁵
  • Privatisation of Tradewinds Plantation Berhad⁷⁶
  • IOI Corporation Berhad's acquisition of Unico-Desa Plantations Berhad.⁷⁷

At the end of the day, we should not just depend on commodity prices to make our decision. The company we invest in still has to have value financially. However, the best time to start investing in a cyclical industry like commodity is during a time of weakness. In Howards Marks' The Most Important Thing Illuminated, he highlighted The Poor Man's Guide to Market Assessment.⁷⁸ In this short test, Howard Marks established a simple exercise that might help us to take the market sentiment of the current markets. And if you find that most of your ticks are in the left-hand column, you might want to be more conservative. Table 9.6 shows a short excerpt of the exercise.

At the end of the day, it does not mean that if we can figure out where we stand in a cycle, we will know exactly what will happen next. But it does help not to get caught up in the midst of any irrational exuberance or a market bubble when it is taking place.

Scalable Growth Runway    After discussing about the uncontrollable, let's end this section with the controllable factors. In the palm oil business, there are generally two ways to increase production:

• increasing planted area
• increasing yields from oil palms approaching prime age.

And we like players which excel in both areas.

First, planters can grow by increasing their planted area. No land means no crops, which translates to no money. As good (location and price) plantation land appears to be getting scarce in the market, we are looking for companies with sizeable unplanted land. What do we mean by the ability to increase their planted area? Here are two scenarios:

• Plantation A: planted area of 100 hectares, with 200 hectares unplanted
• Plantation B: planted area of 200 hectares, with 100 hectares unplanted.

Even with identical land of 300 hectares, Plantation A could potentially increase its earnings by 200% compared to Plantation B's 50%.

In 2015, First Resources produced 687,248 tonnes of CPO. With the company's total nucleus planted area of 178,338 hectares (inclusive of 50,296 hectares of immature nucleus planted area),⁷⁹ First Resources looked to have both the resources and the expertise to achieve a CPO production of 1 million tonnes between 2017 and 2018.

Next, our focus is on the plantation's average age profile. This follows the concept of being vested before the upcycle of production after its tree matures. As the prime age for an oil palm is from 7 to 18, we prefer estates closer to the age of 10 rather than 20, to allow us to enjoy the upswing in production. With over 56% of plantings in the young and immature stage,⁸⁰ First Resources has one of the youngest age profiles in the region, positioning it well for strong production growth over the next few years as its trees mature.

High Growth Potential    We have all heard stories of investors invested in companies which gave them ultra-high returns. Investors who have been invested in well-known companies such as Apple Inc, Microsoft Corporation, 3M Company and Procter & Gamble Company since the early days would have seen their returns in multiple folds of their capital.

Interestingly, we are also able to find such companies in Asia too. The share price of Shanghai-listed Kweichow Moutai Company Limited has also increased more than 5,600% August 2001 to February 2017.¹⁰²

All these companies have one thing in common. They have demonstrated strong growth for years, even decades! So, if we want to find such companies to invest in, we have to focus on one key concept – growth potential, the potential for fast growth.

Already Free Cash Flow Generative    What makes Tencent Holdings stand out from other companies with huge growth potential is that the company is already very much profitable, even at this point of their growth.

From our preliminary screening, Hong Kong-listed Tencent Holdings – one of the largest internet companies in China – stood out because the company demonstrated very strong growth and is even growing its free cash flow at a significant rate. On top of that, it hardly has any debt on its balance sheet. The company also has a long history as a listed company, with its growth prospects looking better by the day.

Tencent Holdings earns its revenue through two major avenues, Value-added Services (“VAS”) and online advertising. Its services such as QQ or WeChat have some free features for users, but they also have many value-added services that users can buy to enhance the whole social network experience.

VAS contributed towards 78% and 85% of the company's revenue and gross profit respectively in 2015. Tencent Holdings also generates income from allowing users or companies to place an advertisement on their platform. In the same year, online advertising contributed 17% and 14% of revenue and gross profit respectively.¹⁰³

Tencent Holdings also saw amazing growth in the past decade. Its revenue and net profit have increased from just RMB3 billion and RMB1 billion in 2006¹⁰⁴ to RMB103 billion and RMB29 billion in 2015.¹⁰⁵ That represents a compounded growth of 43.4% and 40.1% in revenue and net profit over the past decade respectively. No matter how you interpret it, we have to say that we are impressed.

Since its initial public offering in 2004, the company has returned more than 25,700% return to shareholders based on the increase of its share price up to March 2017.¹⁰⁶ Moreover, the business had also substantially grown its free cash flow over the past decade.

Huge Future Optionality    Even though the company has seen such tremendous growth, its prospects are still very bright. With such a large gaming community within its social media network, Tencent Holdings is the partner of choice of many international gaming companies with plans of entering the Chinese market. The company's plan is simple, yet very effective:

• Attract users to partner platforms.
• Increase products and services.
• This in turn attracts more users to partner platforms – a virtuous cycle.

One such partner is none other than Electronic Arts Inc. – one of the largest gaming producers in the world. Electronic Arts Inc. have a partnership with Tencent Holdings to distribute their games in China, which have been translated and tailored for Chinese consumers.^107,108 Other than games, Tencent has also made headway into the live and on-demand video arena, with the National Basketball Association (“NBA”) extending their partnership with Tencent Holdings as NBA's exclusive official digital partner in China for five years.¹⁰⁹

In addition, Tencent Holdings is already adding other services and content onto its two social networks. A range of services the company provides include:¹¹⁰

• community portal
• emails
• RTX – enterprise messenger
• security software mobile
• Tencent mobile application store
• mobile browser
• media player
• online payment
• music portal
• video streaming
• sports streaming
• mobile video
• digital publishing
• WeChat digital stores.

Other than these services that it is developing to add to its existing ecosystems, Tencent Holdings is also one of the biggest venture capital investors in China.¹¹¹ Most notably, Tencent Holdings is an investor in Didi Chuxing,¹¹² the main ride-hailing company in China, and JD.com,¹¹³ the second-largest e-commerce retailer in China. In 2016, Tencent made one of its largest investments with an acquisition of up to 84% of Supercell Oy. This transaction valued Supercell OY at USD10.2 billion.¹¹⁴

In short, we concluded that Tencent Holdings is far from running out of growth opportunities. In fact, the contrary is true; the company's avenues of growth are seemingly endless!

In summary, if you are looking to invest in the likes of Facebook, Inc., Netflix, Inc., Paypal Holdings Inc, Electronic Arts Inc., Activision Blizzard, Inc. or Alphabet Inc (Google) etc., why not just try Tencent Holdings?