1. China's tech giants reported relatively robust 2019 performances, although weakness in Q120 could persist into coming quarters. 2. Of the three biggest tech companies, Tencent’s well-diversified business model could make it the most resilient amid the Covid-19 (coronavirus) contagion. Chinese tech giants Baidu, Alibaba and Tencent (commonly referred to as the BAT group) have sounded caution over 2020 sales owing to the Covid-19 outbreak, defying expectations that the contagion would provide a shot in the arm for online services. While the three companies could enjoy boosts in business areas related to telecommuting and online entertainment, weaker economic activity in China has led to many businesses slashing their budgets for advertising, which forms a considerable proportion of the revenue profiles of all three companies. Depressed consumer sentiment in the country will also lead to lower sales of non-essential goods and services, severely impacting e-commerce sales. Of the three companies, we believe that Tencent's diversified model means it is likely best-placed to weather the disease outbreak, should it prove to be a protracted affair.
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