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

Its gaming business drove revenues at Tencent during the quarter. This includes investments in cloud computing, retail, online entertainment and payments.

Their parent company Tencent first became China's largest tech company in terms of market capitalization in 2016, and is now going back and forth with e-commerce behemoth Alibaba in the race for this title.

Its shares were up 3.3 per cent to HK$409 as of 0200GMT, giving Tencent a market capitalisation of US$496 billion. That compares to the 17.4bn-yuan average of estimates compiled by Bloomberg.

Tencent posted a 61 per cent jump in net profit on a 48 per cent rise in revenue for the first three months of the year, beating consensus estimates.

"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. The increase there was mainly driven by growth at smartphone games, including existing titles such as Honour of Kings and newly launched titles MU Awakening and QQ Speed Mobile. The company announced that had seen growth in the double digits related to the number of daily active users for that game.

Tencent is banking next on the latest global phenomenon-"battle royale" games, in which a large group of players shoot each other until only one remains standing. Developed by Tencent's own studio, the mobile title resembles the popular desktop title League of Legends, whose developer was acquired by Tencent in 2015.

There's an argument to be made for stripping out extraneous items because Tencent runs the games and social side of the business itself, but doesn't have direct control over investees.

But overall costs surged 51 percent.

"We will continue to invest in improving our own products as well as enabling services for our partners", founder and Chief Executive Officer Ma Huateng said in a statement.

Strong mobile gaming revenue and 7.585 billion yuan in investment gains helped buoy its gross profit margin to 50.4 percent, the first sequential quarterly increase since the second quarter of 2015.

Social networks revenues increased by 47% to RMB18.1 billion as WeChat user numbers passed 1.06 billion.