Newly Issued Bond: Tencent USD & RMB Bond; IPG: 3.0% - 6.0%

• Tencent Holdings Limited (hereinafter referred to as "Tencent") intends to issue a total of four tranches of USD and RMB senior unsecured bonds. The USD bonds are 10-year and 20-year tenors, with reference indicative yields of 5.37% (US 10-year Treasury yield + 80 basis points) and 5.96% (20-year Treasury yield + 90 basis points), respectively. The RMB bonds are 10-year and 30-year tenors, with reference indicative yields of approximately 2.95% and 3.55%, respectively. The proceeds raised from the issuance will be used for general corporate purposes.

• Currently, the issuer's credit rating is A+ / A (S&P / Fitch). This bond issuance is expected to receive the same A+ / A (S&P / Fitch) ratings, classifying it as an investment-grade bond.

• Tencent was founded in 1998 and listed on the Hong Kong Stock Exchange in 2004 (Stock Code: 700). Its current market capitalization is approximately HKD 4 trillion, making it a leading internet and technology enterprise in China. The company's business encompasses online games, social platforms (WeChat and QQ), online advertising, fintech, and business services, among which WeChat is one of China's largest social and lifestyle service ecosystems, commanding a massive and highly sticky user base.

• In 2025, Tencent's full-year revenue increased by 14% year-on-year to approximately RMB 751.8 billion (the same currency applies below), and its gross profit increased by 21% to RMB 422.6 billion, demonstrating robust overall profitability. The growth was primarily driven by the strong performance of marketing services under the continuous optimization of AI ad targeting accuracy, while value-added services and fintech businesses also provided stable contributions.

• Entering the first quarter of 2026, revenue growth slowed to 9% (reaching RMB 196.5 billion), but operating profit grew by 17% year-on-year to RMB 67.4 billion. This was mainly because marketing services recorded a high growth of 20% driven by AI, and its high-margin nature effectively offset the weaker domestic gaming revenue within value-added services and the delayed recognition of some revenues due to the later date of the Lunar New Year, reflecting excellent resilience in the business structure.

• Looking ahead, the deeper application of artificial intelligence technology is expected to further improve advertising efficiency and cloud service demand, becoming an important driving force for the company's long-term growth. In terms of credit profile, as of the end of March 2026, Tencent held cash reserves of RMB 533.6 billion, which is sufficient to fully cover its total debt of RMB 386.8 billion, maintaining a net cash position and a solid financial condition. In the first quarter of 2026, cash flow generated from operating activities increased by approximately 32% year-on-year to RMB 101.4 billion, and free cash flow reached RMB 56.7 billion, reflecting Tencent's strong cash generation capability and providing sufficient support for debt servicing. The highest yield among the new bonds is the 20-year USD bond, reaching 5.96%. Compared to similar Asian investment-grade bonds, the yield is reasonable, and the new bonds also offer other choices across different tenors and currencies. Considering the company's stable cash flow and strong market position, investors seeking stable returns may consider this bond, though it should be noted that the final issuance price may not be as high as the indicative yields.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds NIL positions in the abovementioned securities. The analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.