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.
Net income climbed 61% to 23.3bn yuan (US$3.7bn) in the three months ended March, the Shenzhen-based company said on Wednesday. That compares to the 17.4bn-yuan average of estimates compiled by Bloomberg. Adjusted earnings per share were 1.92 yuan, compared to the 1.94 yuan average of 14 analysts.
Tencent, owner of the giant WeChat messaging and social network platform, has been opening its wallet to sustain growth as gaming from desktop gaming slows.
The company is investing in cloud computing, online entertainment and physical retail stores as it locks horns with Alibaba Group. 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.
“We expect Tencent to consolidate both the PC and mobile games markets,” Alex Yao, a Hong Kong-based analyst at JPMorgan Chase & Co, said in a report. “Tencent’s strength in mobile games market also comes from its equity relationship with leading global developers.”
Revenue rose 48% to 73.5bn yuan, compared with analyst estimates for 70.8bn yuan.
Shares of Tencent were largely unchanged in Hong Kong before earnings were announced. The stock has fallen 2.4% this year, compared to a 14% rise for New York-listed Alibaba. — Reported by Lulu Yilun Chen, (c) 2018 Bloomberg LP