Tencent posts 50.9pc income growth

PUBLISHED : Thursday, 15 November, 2007, 12:00am
UPDATED : Thursday, 15 November, 2007, 12:00am

Tencent Holdings, operator of QQ, the mainland's largest instant message platform, said third-quarter profit jumped 50.9 per cent as revenue from community networks, online games and advertising soared.

Net profit rose to 426.3 million yuan from 282.6 million yuan a year earlier on a 43.5 per cent gain in revenue to 1.06 billion yuan.

Tencent's diluted earnings per share totaled 23.2 fen, beating a consensus estimate of 19 fen, said Jason Bruceschke, Citigroup's head of Asia internet/media research.

'Investors had been patient with Tencent's lack of growth for the last two to three quarters, but today's result, which shows it grew significantly quarter over quarter, proved investor patience has paid off,' said Mr Bruceschke.

Third-quarter profit grew 27.5 per cent from the previous quarter, while revenue was up 21.8 per cent quarter on quarter. The major driver was internet valued added services, which grew 31 per cent from the previous quarter to 717 million yuan.

QQ has been successful as a community tool for mainland teenagers. Active members reached 288.7 million, almost double the internet population cited by mainland officials.

Online gaming increased 52 per cent from the last quarter, with summer holidays and the launch of self-developed title QQ SanGuo and QQ Huaxia, which was developed under a partnership with Shenzhen Domain. Online advertising rose 26 per cent from the previous quarter.

Mobile service income, however, registered a 6.1 per cent quarterly drop, as the company switched from its own Mobile QQ service to a service jointly operated with China Mobile. The migration of user base to the new platform led to some subscription cancellations, said the company.

The firm expects seasonal factors to limit growth in the fourth quarter.

'Winter exams will cause teenagers to spend less time online,' said Mr Bruceschke.