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Chart of the Day: Tencent’s Rise to Dominance

Tencent Holdings Ltd (SEHK: 700) is a leading internet company in China with businesses across online games, communications and social media, digital entertainment, content and more. The company is reporting its closely-watched third-quarter results tomorrow (Wednesday 13 November).

The company was listed on Hong Kong Stock Exchange in 2004, and has since grown into its current stock market behemoth that it is today. Below is a chart I’ve gathered that illustrates its extraordinary rise; Tencent’s revenue growth since its IPO to 2018.

Chart of the day

Source: Tencent’s Annual Reports

During the period, revenue grew by 284 times or a compound annual growth rate (CAGR) of 49.7%. Personally, this is an impressive track record, especially considering that it has grown every year since its IPO.

The strong growth in revenue has nicely translated into strong profits over the years, too. In those 15 years, net profit surged from RMB 400 million (US$57.1 million) to RMB 78.7 billion (an increase of 196.8 times).

As a result, investors who bought Tencent’s stock during its IPO would have turned their investment by at least 150 times (assuming they never sold a single share in the last 15 years.

Key takeaway

There are plenty of lessons to take away here. But for me, one clear lesson is this: investors should find a good growth company, invest in it, and hold it for a long, long time.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.