Saturday, 22 September, 2018

Chinese online giant Tencent posts 61% rise in net profit

Chinese online giant Tencent posts 61% rise in net profit Chinese online giant Tencent posts 61% rise in net profit
Sherri Watson | 17 May, 2018, 02:16

China's largest social network operator reported net income of 23.29 billion yuan (US$3.65 billion) in the quarter ended March 31, beating average market expectations by about 30 per cent. Revenue reached 73.53 billion yuan, up 48 per cent from the same time past year, driven by online advertising, online games and messaging services. The owner of the giant WeChat messaging platform opened its wallet to sustain growth as PC gaming slows, investing in cloud computing, entertainment and physical retail to lock horns with Alibaba Group Holding Ltd.

Tencent's investors had become used to its shares going up and up, until recent months. That helped drive a 55% local currency gain in advertising revenue to 10.69 billion yuan.

Tencent, China's leading provider of mobile messaging and online games, reported revenue of 73.53 billion yuan, or $11.693 billion. Tencent has exclusive release rights for PUBG in China but says the game is "yet to be monetized", implying future additional revenue stream from the title.

Shares of Tencent, run by China's richest man, Ma Huateng (aka Pony Ma), rose more than 6% Wednesday thanks to the solid results.

But it adjusted earnings of 1.915 yuan, which is equal to 30 cents. Shares in Naspers Ltd, which as Tencent's top shareholder is often regarded as a proxy for the Chinese firm, rose 2.6 per cent in early Wednesday trade.

"The results were good even without the one-time gains, but the gains made it even better", said Bhavtosh Vajpayee, a Hong Kong-based research analyst at Bernstein. Gaming revenue was up 26%. The company announced that had seen growth in the double digits related to the number of daily active users for that game. Anchored by its marquee title, the smartphone games business yielded 68 per cent growth in the quarter. The essay, written by veteran tech editor Pan Luan, claimed the company had "lost its dream" by becoming an investment company instead of continuing to develop great products in core areas such as search, e-commerce, information streaming, short video and cloud services. Fortnite has been developed by video game developer Epic Games who Tencent has a stake in - the game is now unavailable in China, but there are plans to launch the game in the region in the coming months.

Fortnite is the other game that is driving a strong quarter.

In the video content sector, Tencent poured a total of $1.1 billion into two rivals in a 24-hour period, investing US$632 million and US$461.6 million respectively in Chinese game-streaming platforms Douyu and Huya in March. "Honour of Kings was a major contributor for mobile gaming revenue".