Chinese gaming and social media giant Tencent Holdings posted a 29% rise in second quarter profit, a slower pace of growth after the coronavirus pandemic led to a boom in online gaming last year.
Net profit for the three months to June came in at C¥42.6-billion, above an average Refinitiv estimate drawn from 13 analysts of ¥34.4-billion. Revenue climbed 20% to C¥138.3-billion, in line with expectations. Sales from mobile games grew 13%.
The results come amid investor concerns that Tencent will continued to be ensnared in an onslaught of regulatory actions that Chinese authorities have unleashed on several sectors with the tech industry being the hardest hit.
In particular, regulators have launched a slew of antitrust probes, cited the need to boost data privacy and pushed for better treatment of consumers. Tencent has been barred from entering into exclusive music rights agreements and saw its US$5.3-billion plan to merge DouYu International Holdings and Huya blocked by China’s market regulator last month.
Shares in the world’s largest gaming firm by revenue also took a battering after a state media article described online games as “spiritual opium” and expressed concern about their impact on children. That fallout saw Tencent temporarily lose its crown as Asia’s biggest company by market capitalisation to chip-maker TSMC. Its shares remain down some 8% since the 3 August article.
Tencent has since announced new measures to reduce the time and money children spend on games, starting with its most popular game, Honour of Kings. It also last month briefly suspended registrations of new users in mainland China for WeChat, the country’s dominant instant messaging platform, to upgrade its security technology.
Tencent has said the company is very focused on compliance and risk management. — Reported by Brenda Goh, (c) 2021 Reuters