Tencent profit surges as growth hits fastest pace since 2018

HONG KONG • Tencent Holdings Ltd boosted revenue at the fastest pace in two years, defying an economic downturn in China as it prepares to face a ban on its WeChat messaging app by US President Donald Trump.

Sales rose 29% to 114.9 billion yuan (RM68.94 billion) in the three months ended June, beating estimates with a surge in online gaming revenue.

It reported net income of 33.1 billion yuan that beat the highest of analysts’ projections, thanks to a gain of more than 8.6 billion yuan from asset disposals and valuation gains in its portfolio of investments. Shares in Prosus NV, which holds the Internet assets of major shareholder Naspers Ltd, gained about 3% in Amsterdam.

China’s biggest social media company has benefitted from an Internet resurgence during Covid-19, though it still faces a US ban on its WeChat service with potentially far-ranging impact.

While Tencent didn’t address that sanction in its earnings outlook, executives will seek to reassure analysts on a call later it can withstand a White House campaign that’s already ensnared Huawei Technologies Co Ltd and dozens of Chinese up-and-comers.

Tencent is focusing on its core home market amid growing foreign hostility. It won approval from Beijing to earn money from Call of Duty Mobile, the smartphone version of a long-running franchise that will underpin its gaming business, and has charted a line-up of new titles for 2020 to shore up resilient franchises Peacekeeper Elite and Honor of Kings.

New titles like Brawl Stars drove a 40% surge in online gaming revenue during the quarter — its big- gest increase since 2017. It’s also driving discussions to merge US-listed Huya Inc and DouYu International Holdings Ltd to create a Twitch-like US$10 billion (RM42 billion) local leader in games streaming. Tencent has already folded Huya’s results into its own, swelling both its top and bottom line. — Bloomberg