China's Tencent beats estimates with 30% profit rise
Chinese internet giant Tencent said on Wednesday it posted a nearly 30% rise in profit in the most recent quarter as new games already in the pipeline mitigated any impact from a government crackdown on the game sector.
Shenzhen-based Tencent said net profit came in at 23.33-billion yuan ($3.39-billion) in the three months ending September 30, beating a Bloomberg analyst estimate of 18.39-billion yuan.
Tencent’s earnings have drawn close scrutiny after the company posted a 2% year-on-year fall in profit for the preceding quarter, which Bloomberg data indicated was the first such decline in at least a decade.
Known for its ubiquitous WeChat social media and messaging programme, Tencent relies heavily on revenues generated by video games played by its users, and the company outlook has been clouded by a government freeze on approvals for new game titles since earlier this year.
The government also has initiated a campaign to tighten regulation of the fast-growing industry amid concerns over gaming addiction.
The recent negative news has lopped a stunning amount off of Tencent’s total market value — more than $250-billion — this year as its Hong Kong-listed shares plummeted.
Tencent said smart-phone game revenue grew 7% in the third quarter to 19.50-billion yuan.
But PC client game revenues were down 15% to 12.4-billion yuan “due to user migration to mobile games and the high base in the same quarter last year.”
Revenues got a boost from the release of 10 new titles during the quarter, Tencent said, adding that it had 15 more games in the pipeline and ready for release.
Analysts said the China gaming industry — the world’s largest, and dominated by Tencent — could feel a squeeze soon due to the cut-off in new title approvals, but added that licensing was expected to resume soon and that the industry continues to enjoy high user demand.
© Agence France-Presse.