The SGA EM Growth portfolio includes positions in Tencent Music, reflecting a focus on quality growth businesses. The portfolio aims to achieve consistent mid-teens earnings growth, supported by predictable revenue and cash flow generation. Despite the challenging environment for quality compounders, Tencent Music is part of a strategy that emphasizes durable and sustainable growth companies.

We also took the opportunity to modestly top up our holding in Chinese company Tencent. Their core business remains strong, capital allocation outstanding and the valuation attractive. The market sees AI putting Tencent on the back foot but our sense is that their new research and product team is very capable. Their AI products like WorkBuddy and Hy3 are exhibiting good early traction.

We also took the opportunity to modestly top up our holding in Chinese company Tencent. Their core business remains strong, capital allocation outstanding and the valuation attractive. The market sees AI putting Tencent on the back foot but our sense is that their new research and product team is very capable. Their AI products like WorkBuddy and Hy3 are exhibiting good early traction.

We also took the opportunity to modestly top up our holding in Chinese company Tencent. Their core business remains strong, capital allocation outstanding and the valuation attractive. The market sees AI putting Tencent on the back foot but our sense is that their new research and product team is very capable. Their AI products like WorkBuddy and Hy3 are exhibiting good early traction.

Tencent continues to be a significant contributor to our portfolio, demonstrating strong operational results despite broader market challenges. The company is well-positioned with a resilient business model and a loyal customer base. Its growth trajectory remains robust, and it is generating high returns on capital, which is particularly attractive in the current market environment. We believe Tencent's valuation remains compelling, especially given its ability to deliver profitable growth amidst the ongoing shift towards AI and technology.

Tencent Holdings Limited operates the leading social network and messaging platforms (QQ, WeChat), the largest online entertainment and media business, and the largest online gaming business in China. Shares of Tencent were up, as core gaming growth reaccelerated, profitability again beat expectations, and the company announced a step-up in AI investments. Tencent has already seen benefits from AI in its core advertising technology, with better targeting, content ranking, and new ways of engagement. We continue to believe in Tencent’s ability to compound earnings, given its growth structure, massive scale, and focus on efficient operations. Longer term, we also believe Tencent could be the largest generative AI beneficiary in China.

Tencent Music Entertainment, majority owned by Chinese social media giant Tencent, operates the country’s number one music streaming platform. The company reported a robust set of fourth quarter results as improved growth, tight cost control, and the ongoing success of its in-house record label boosted margins. We believe profit growth will likely be more muted in the coming years. But the company’s dominance of the Chinese music industry, for the consumption of which Chinese users are increasingly willing to pay, and its business model's inherently attractive cash-generative qualities make it a compelling long-term investment opportunity.