Chinese Internet Giant Tencent Earnings Top, Revenue Soars 59%

Paterniano Del Favero
Agosto 16, 2017

Chinese internet giant Tencent Holdings Ltd. posted double-digit revenue and profit increases as it continued to grow its mobile-gaming, social-media and advertising businesses in the second quarter.

The Shenzhen-headquartered firm said net profit jumped 68 percent year-on-year to 18.3 billion yuan ($2.72 billion) in the three months ended June 30, while revenue advanced by 59 percent to reach 56.6 billion yuan.

Tencent's market valuation is near record highs, fueled by expectations it'll continue to tap the spending power of 200 million gamers on Honour of Kings and deliver more hits.

"Revenue growth in smartphone games was driven by existing titles such as Honour of Kings. and new titles such as the China version of Contra Return, Dragon Nest Mobile and Legacy TLBB Mobile", Tencent said.

Online advertising grew 55 per cent to 10.1 million yuan during the quarter, as the company makes better inroads harvesting the earnings potential from the nearly 963 million monthly active users on its WeChat social networking tool, also known as Weixin on the mainland. "Advertising business also topped our expectations and grew at a healthy speed". The stock has gained nearly 71 per cent since the beginning of this year, giving the company a market capitalisation of HK$3.07 trillion (US$392 billion).

Revenue for Tencent's general online advertising business, which is anchored by its video and news services, was up 55 percent to 10.1 billion RMB, or $1.5 billion.

The company said its WeChat app, known in China as Weixin, saw 963 million monthly average users in the quarter, growing 19.5% from a year earlier.

But Tencent recovered quickly on Monday, and in trading on the Hong Kong Stock Exchange ahead of the results announcement Wednesday, its shares climbed 1.4% to HK$323.20.

Tencent's stellar earnings underscores how the Shenzhen-based company, already the operator of China's largest social networking tool, is earning dividends from the ubiquity of mobile internet from the country's nearly 700 million smartphone users. They also foresee "strong growth potential in performance advertising and surging revenue growth in the payments business".

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