Mobile gaming drove Tencent’s profits up by 61 percent in the first quarter, topping expectations and dispelling concerns about tighter revenue margins.
Shares in the Hang Seng-listed tech conglomerate rose by more than seven percent in morning trading on Thursday, the highest one-day jump since 2015.
January to March saw net profits of 23.3 billion yuan (3.65 billion US dollars), as mobile gaming soared by 68 percent and messaging platform WeChat hit one billion active monthly users for the first time.
Tencent has expanded into many areas including Fintech, e-commerce, driverless technology and mobile payments, but it is the gaming sector that is driving the current profit push. Gaming revenue hit 21.7 billion yuan (3.41 billion US dollars), as titles like Honor of Kings saw daily active users double in the first three months of the year.
Tencent’s grip on the gaming market is set to strengthen further, with the company “yet to monetize” the hugely popular PlayerUnknown’s Battleground (PUBG), which will see a Chinese PC version launched this year.
Chinese gamers are also eagerly anticipating the official release of Fortnite, an e-sports title with some 40 million gamers worldwide which Tencent acquired the rights to last month, following a 100 million yuan (15.8 million US dollar) investment in developer Epic Games.
Earlier this year Tencent became the first Chinese company to reach a market capitalization of 500 billion US dollars, but that decreased sharply in March, losing 51 billion US dollars in the space of two days after share prices plummeted. The stock drop came after concerns that profit margins would be affected by the company’s aggressive investment strategy.
The surge in share prices on Thursday means the company's market cap has returned above the 500-billion-dollar threshold, hitting 511 billion US dollars according to data from Bloomberg.
BY Nicholas Moore
