HONG KONG: Tencent Holdings Ltd.’s quarterly earnings beat estimates, boosted by gains on investments, giving shareholders much-needed assurance the Chinese gaming behemoth is bound for a revival.
Net income rose 17% to 27.21 billion yuan in the three months ended March compared with the 19.4 billion-yuan average of analysts’ estimates. Revenue climbed 16%, about a third of the pace a year earlier.
Tencent’s recovering from a brutal 2018. Last week, China’s largest social media company finally unveiled a viable entry in the Battle Royale genre, a red-hot arena it’s been shut out of since Beijing suspended game approvals last year. Now that regulators are again green-lighting titles, investors are counting on the worst being over as the company invests in video and news personalization to win back users from Bytedance Ltd.
‘We expect Tencent’s fundamentals to improve in the second half, backed by the launch of new games and stronger monetization potential of shooting games,’ Alicia Fu, an SWS Research analyst, said in a research report prior to earnings. ‘We expect to see a more diversified and sustainable recurring revenue model for Tencent’s mobile games.’
Shares of Tencent rose 0.9% in Hong Kong before earnings were announced. The stock has gained 19% this year, compared with a 28% rise for New York-listed rival Alibaba Group Holding Ltd.