Economy

Chinese online giant Tencent posts 61% rise in net profit

Chinese online giant Tencent posts 61% rise in net profit”

Tencent Holdings, in which JSE-listed Naspers holds a 31.2% stake, posted first-quarter profit that blew past analysts' estimates, bolstered by mobile game blockbusters like PlayerUnknown's Battlegrounds. That was buoyed by a one-time gain of nearly 7.6 billion yuan as the value of investments in arenas from video streaming to news content rose. Tencent's operating margin fell in Q4 and earlier this year, the company said it was focusing on investments over short-term margins. It's also secured Chinese distribution rights to some of the world's hottest games including PUBG and Fortnite, adapting some into mobile titles as more users spend time on smartphones.

On Wednesday, Tencent reported its earnings for the first quarter that beat Wall Street expectations boosted by its hugely successful gaming business. "Honour of Kings was a major contributor for mobile gaming revenue".

Revenues totaled 73.53 billion yuan ($11.5 billion) versus a Thomson Reuters estimate of 71.04 billion yuan. That compares to the 17.4bn-yuan average of estimates compiled by Bloomberg.

Tencent, which is listed in Hong Kong, was not yet active in over the counter trading before the open on the stock market today.

User numbers of Tencent's popular WeChat messenger app reached 1.04 billion. Revenue from Value Added Services, which includes online games and messaging, rose 34 percent to 46.9 billion yuan. The company announced that had seen growth in the double digits related to the number of daily active users for that game. 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. Developed by Tencent's own studio, the mobile title resembles the world's most popular desktop title League of Legends, whose developer was acquired by Tencent in 2015. Another title - Honour of Kings - was the world's highest-grossing mobile game past year thanks to its China-based users and Tencent has been pushing it to worldwide audiences. Last month, Tencent partnered with United States developer Epic Games to launch Fortnite in China. "Tencent's strength in mobile games market also comes from its equity relationship with leading global developers".



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