Tencent beats estimates on mobile games growth

HONG KONGTencent Holdings Ltd posted a quarterly pro t that surpassed all estimates as its marquee title “Honour of Kings” drove a 54% surge in mobile gaming revenue.

China’s largest corporation reported a 70% surge in net income to a record 18.2 billion yuan (RM11.65 billion) for the three months ended June, exceeding the 13.5 billionyuan average of estimates compiled by Bloomberg. Sales rose 59% to 56.6 billion yuan, also topping projections.

Tencent’s market valuation is near record highs, fuelled by expectations it’ll continue to tap the spending power of 200 million gamers on “Honour of Kings” and deliver more hits. The title’s popularity helped sales from smartphone play overtake desktops for the first time.

The still-nascent advertising and finance business on instant messaging app WeChat has also boosted investors’ confidence it can compete with ad-leader Alibaba Group Holding Ltd and sustain growth.

“Mobile games revenue grew fast, benefitting from titles like “Honour of Kings”,” said Li Yujie, an analyst with RHB Research Institute Sdn Bhd in Hong Kong. “Advertising business also topped our expectations and grew at a healthy speed.”

Shares of Tencent rose 1.4% yesterday and have gained 70% this year, compared to an 80% rise for New York-listed Alibaba.

Revenue from value-added services, which include online games and messaging, climbed 43% to 36.8 billion yuan. — Bloomberg