Companies in the news ... and how they were assessed
Tencent: coming of age
Move over Facebook et al, here come the Chinese. Tencent, the Hong Kong-listed gaming and messaging giant, this week “punched through a stock market capitalisation of $500bn”, becoming the first Chinese tech outfit “to join an elite group” dominated by a handful of US companies, said Louise Lucas in the Financial Times. The Chinese dynamo behind Wechat – a messaging app considered indispensable by most of its 980 million users – actually eclipsed Facebook in the valuation stakes on Tuesday, making Tencent’s founding boss, Ma Huateng (aka “Pony Ma”), briefly worth more than the founders of Google, according to Forbes, with a $48.3bn private fortune. “Little known outside China, Tencent dominates its home turf, thanks in part to Beijing’s block on Facebook.” But Ma’s strategy of building “an ecosystem of technology” has bought “an ever bigger slice of its users’ time and money”. And investors are excited about plans for a foreign push: Tencent is rolling out payment services in Malaysia and plans to take its “addictive” game, Honour of Kings, to the US, where it already has stakes in several tech ventures, including Uber rival, Lyft. Still, Tencent’s triumph “creates a bit of a market headache”, said Alec Macfarlane on Reuters Breakingviews. As Hong Kong’s sole “tech heavyweight”, the outfit is “responsible for about one-third of all gains” on the Hang Seng index this year. “Should it drop sharply, a lot of investors would feel the pain.”
Centrica: Conn tricks
No one can accuse Iain Conn, the boss of British Gas owner Centrica, of “failing to lead from the front”, said Alex Brummer in the Daily Mail. “His effort to drive a coach and horses through the standard variable tariff,” which hooks energy consumers into uncertain prices, “could be a useful step.” Instead, fixed tariffs – which cover a timespecified period, operating on the same principle as a mortgage – would “switch the price risk” from consumers to suppliers. “Well, huzzah!” said James Moore in The Independent. It seems “the industry bad guy” wants to be seen “as a champion of reform and the consumer’s new BFF”. It’s about time. British Gas hiking electricity prices by 12.5% in August was “one of the more tone-deaf business decisions we’ve seen in recent years”, especially since that the Government is currently pondering price caps. Heading off that price cap is, of course, the “ulterior motive to all this”. As uswitch’s Richard Neudegg points out, Centrica’s offer “doesn’t amount to all that much”. Customers failing to pick a new tariff at the end of their fixed term will be put on an “emergency” or “default” tariff. What’s the betting this ends “as another poor-value standard tariff with a different name”?
M&s/asos: Tesla moment
Earlier this year, an analyst predicted that Asos “would leapfrog” Marks & Spencer in value, says Zoe Wood in The Guardian. The 17-year-old fashion website has finally “usurped” its 133-year-old rival, as its market value hit £4.89bn a week ago. It has been dubbed the high street’s “Tesla moment” – when industry “stalwarts” are overtaken in value “by new online rivals”, despite often huge differences in revenues. In April, the electric carmaker sped ahead of 114-year-old Ford to become America’s most highly valued carmaker. Sales at Asos were £1.9bn last year, compared with £10.6bn at M&S.