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An extensive ecosystem
Tencent Holdings
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Tencent Holdings (Hong Kong: 700) is the largest gaming, entertainment and communication platform in China. It is a major player in online games; non-gaming value-added services, such as the provision of video, music and live-streaming; digital advertising, financial technology (fintech) and other businesses, such as cloud computing. The company is a key beneficiary of artificial intelligence (AI) across its businesses. Tencent has built its own ecosystem and has a strong relationship with its users via WeChat, one of China’s most popular apps. With more than 1.3 billion users worldwide, WeChat has been transformed from being an instant messaging app into becoming a platform that can enable everything from making payments and playing games to ordering food and booking flights. The company seems to have adjusted well to the changing regulatory environment and slowing Chinese economy and continues to deliver strong cash flows, albeit at a much slower pace of growth. Tencent has also made significant public and private investments in China and globally. Trading at attractive valuations, the company has been buying back shares, which further enhances earnings per share.
Doosan Bobcat
Doosan Bobcat (Seoul: 241560) is a South Korea-based compact-equipment and industrial-vehicle manufacturer. Its product range includes loaders, excavators, mowers, and forklifts. The owner of Bobcat, the leading compact equipment brand in the United States, Doosan Bobcat is a key beneficiary of growth in construction activity in the country. The company has been bolstering the competitiveness of existing products and adding new ones to its range, with a focus on innovation, including electrification, automation and connectivity. It receives about 25% of its revenues from demand for replacing machine parts and attachments. Large free cash-flow generation provides Doosan Bobcat with a buffer to withstand any volatility.
Samsung Life Insurance
Samsung Life Insurance (Seoul: 032830) is the largest life-insurance and leading health-insurance company in South Korea. Its strong brand recognition and leading market share in the insurance sector allows it to derive premium income from annual sales and customers’ renewals, resulting in a steady earnings stream. With ownership interests in other key Samsung Group companies, including Samsung Electronics and Samsung Fire & Marine Insurance, Samsung Life Insurance provides exposure to these companies at a discount to their market value. With the semiconductor cycle bottoming out, and expectations of a recovery this year driven by AI-induced demand, exposure to Samsung Electronics should also contribute to Samsung Life’s share-price performance. An improving dividend payout should further enhance shareholder value.
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