Tencent jumps 5.69pc on upgrade

PUBLISHED : Thursday, 25 June, 2009, 12:00am
UPDATED : Thursday, 25 June, 2009, 12:00am

Shares in Tencent Holdings, the mainland's biggest instant message service provider, rose 5.69 per cent yesterday after Deutsche Bank raised the stock's target price to HK$111, citing strong business performance.

Tencent, which operates the service under the QQ brand, closed at HK$90.05, up HK$4.85.

Deutsche Bank said strong growth in the active instant message user base could contribute to future growth in revenue and profit.

'Our channel checks suggest in the second quarter that active peak concurrent users for QQ reached 61.2 million, up from 57.5 million over [the] previous quarter,' Deutsche Bank analyst Alan Hellawell wrote.

Tencent's social network service, Qzone, contributed 21 per cent of Web traffic to its portal, which would improve user 'stickiness' and offer more channels for monetisation, the bank's report said.

The game business also continued to grow in the second quarter, with QQ Game, a game portal, recording a peak of 6.2 million concurrent users, up from 5.8 million in the first quarter. Its online game, Dungeon and Fighter, recorded 1.9 million peak concurrent users, up from 1.5 million. Tencent recently further strengthened its online game pipeline through its partnership with Nasdaq-listed Take Two Interactive. They will co-develop an online version of Take Two's NBA 2K basketball simulation and distribute the game on the mainland and in Taiwan, South Korea and Southeast Asia.

Goldman Sachs said the tie-up would help Tencent improve its development capability in online games.