Tencent reports record quarterly profit
China's biggest gaming and social media operator Tencent report record high quarterly profits thanks to strong advertising income.
The Shenzhen-headquartered giant said yesterday that profit in the three months ended June 30 jumped 68 percent to 18.3 billion yuan (US$2.72 billion).
The popularity of the fantasy role-playing game Honour of Kings, which is especially popular among teenagers, pushed up gaming revenue, while income from smartphone games climbed 54 percent to 14.8 billion yuan, surpassing that of desktop games for the first time.
The staggering rise in gaming popularity has been coupled with an awareness that games should be enjoyed in a responsible way. "While our games business continued to grow, we have stepped up our effort to ensure users play games in a healthy manner," chairman and CEO Pony Ma said in a statement.
Online advertising income rose 55 percent to 10.15 billion yuan, boosted mainly by WeChat ad revenue as brand advertisers were keen to tap into social networking capabilities to promote their products and services.
In June, the monthly active users of online messaging and social platform WeChat rose to a new record of 963 million, adding 19.5 percent from a year ago.
"Our payment business continued to make everyday life easier for Internet users, with increased adoption of WeChat payments for offline transactions," he added.
Internet consultancy firm iResearch estimated mobile payment transaction size to grow nearly 70 percent within the next two years, while the total market size is set to more than double to reach 229 trillion yuan in 2019.
WeChat's mobile payment market share is quickly catching up with that of Alipay, standing at about 37 percent by the end of last year, compared with Alipay's 55 percent.
Bocom International said in a research note today that it remains positive on the growth of cloud and payment businesses, and the monetization potential in WeChat advertising, while the gaming business is expected to maintain healthy growth. It has set a target price for Tencent shares at HK$372 and maintains a buy rating.
