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

The following is an updated table of Chinese company earnings during the first quarter, starting with the most recent to report. But the cost of revenue in that category doubled to 11.91 billion yuan, due to subsidies and promotional expenses. Meanwhile, Tencent's overall online advertising business achieved 55 per cent year-on-year growth in revenues. But adjusted earnings-per-share, which strips out one-time items, came to 1.92 yuan, missing the 1.94 yuan average estimate.

Strong mobile gaming revenue and 7.585 billion yuan in investment gains helped buoy its gross profit margin to 50.4%, the first sequential quarterly increase since the second quarter of 2015. Operating margin increased to 42% from last year's first quarter of 39%.

Smartphone games revenue, the largest revenue contributor, jumped 68 per cent to 21.7 billion yuan in the quarter.

Another title - Honour of Kings - was the world's highest-grossing mobile game previous year thanks to its China-based users and Tencent has been pushing it to worldwide audiences.

Tencent's gaming unit is also benefiting from the explosive popularity of "Fortnite", the multiplayer battle royale game that has taken the world by storm. The company has however been leery of barraging its users with ads - on Wednesday, it declared that it had raised the maximum number of ads that customers see on WeChat Moments, a function similar to Facebook's newsfeed, to just two a day, from one previously.

Tencent's gaming business has historically done well, with the PC games segment being the company's cash cow for a long time. Revenue from Value Added Services, which includes online games and messaging, rose 34 percent to 46.9 billion yuan.

Fortnite is the other game that is driving a strong quarter. Earlier this month it led a US$820 million round of funding in Shenzhen-based UBTECH Robotics, making it the world's most valuable AI start-up with an estimated valuation of US$5 billion.

The company is exploring ways to integrate short video into its social network platforms, Tencent chairman and chief executive Pony Ma Huateng said in March during annual parliamentary meetings in Beijing. It is available as well on mobile. Fortnite has been developed by video game developer Epic Games who Tencent has a stake in - the game is now unavailable in China, but there are plans to launch the game in the region in the coming months. That's still not cheap: But investors can now expect a return to the good old days of Tencent's shares heading ever higher.