Chinese technology giant Tencent Holdings repurchased 125,000 shares with HK$39.5 million on Tuesday, bringing its total repurchase to 735,700 shares with HK$264.5 million in eight consecutive trading days, shows the company’s filing to the Hong Kong Stock Exchange.
Tencent’s shares closed 0.4 per cent lower at HK$318 on Tuesday after dipping up to 2.1 per cent intraday. The share price is more than 30 per cent lower than the January high.
The stock buyback indicates the company is confident in its prospect and the share price and valuation may be approaching a turning point and is expected to bottom out soon, according to the latest research note from Morgan Stanley. The bank maintains its rating of buy and the target price of HK$420.
As China’s largest online game maker, Tencent has been hit hard by tightening regulations on the sector in recent months. The tech giant posted the first decline in its quarterly profit in the second quarter of this year, which the company said due to the fact they failed to commercialise several games. Gaming business revenue accounted for 41 per cent of its total income in the second quarter, according to its earnings report.
The company announced last week that it will bring the strictest possible real-name authentication to its popular mobile game King of Glory (KOG) by the end of this month. The system will be connected to China’s Public Security Bureau’s data platform to verify whether a player is underage, before deciding accordingly whether their account can be included in the anti-addiction system.
The company said that after completely upgrading KOG’s ‘health system’, it will gradually connect other games to the platform and implement the most stringent authentication possible to protect minors.
The move came after increasingly stringent regulations on the sector hit the country biggest gaming company during recent months.
An official document released late August showed that Chinese regulators overseeing the gaming sector is planning controls on the total amount of online games, an age rating system and measures to limit underage users’ playtime.
Earlier reports showed that Chinese regulators have frozen approval of any new game licenses due to an ongoing “restructuring of power among departments,” and the policymakers are increasingly concerned about violence- and gambling-related content in online games.
On 13 August, the regulators required Tencent halt sales of “Monster Hunter: World” on the WeGame PC-gaming platform, due to a large number of complaints about the fantasy game that it had licensed from Japan’s Capcom.
Tencent’s chairman Ma Huateng later admitted that the authority had suspended issuing licenses for mobile games, “we have several games waiting for licenses and we’re not sure when the approval process will restart.”