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Li Tao

Tencent Holdings, Asia’s most valuable company by market cap, handily beat market expectations as its fast-growing online video streaming unit helped earnings in the quarter to September surge 69 per cent.
“We believe [Tencent Video] has become China’s top online video platform in terms of mobile daily active users and subscriptions,” said Tencent chairman and chief executive Pony Ma Huateng in a statement on Wednesday.
“We believe this success reflects our increasing investment in self-commissioned video content, our improved selection of licensed video content, and our scheduling and audience-management initiatives.”
The Shenzhen-based internet giant reported a 69 per cent jump in net profit to 18 billion yuan (US$2.7 billion) in the quarter ended September 30, up from 10.6 billion yuan in the same period last year.
That surpassed the market consensus of a 16.4 billion yuan net profit in the quarter, according to a Bloomberg survey of analysts’ estimates.
Tencent poised to rub shoulders with Apple and Facebook as China’s first entrant to elite US$500 billion tech club
Ma attributed the gains made by Tencent last quarter to strong revenue growth across multiple business lines, including games, digital content, online advertising and payment-related services.
Total revenue rose 61 per cent to 65.2 billion yuan from 40.4 billion yuan a year earlier, which was ahead of the consensus estimate of 61 billion yuan.
Online games revenue grew 48 per cent year on year to 26.8 billion yuan, driven by Tencent’s popular smartphone game Honour of Kings and new titles, such as the mainland version of Contra Return and Legacy TLBB Mobile.
Benjamin Wu, a senior analyst at Pacific Epoch, said Tencent was on track to “keep its growth momentum in games with a strong pipeline for 2018”.
He expected a new licensed mobile game from Kingsoft to “become a strong driver of significant growth”.
Victor Au, the chief operating officer at Delta Asia Securities, said Tencent has been aggressively “expanding its income channel apart from games, which also generate huge profits for the company”.
Online advertising revenue grew 48 per cent year on year in the third quarter to about 11 billion yuan, lifted by high media advertising on Tencent’s video streaming platform as subscriptions climbed steadily.
Tencent Video has exceeded 43 million paying subscribers, which the company estimated was the largest on the mainland.
Karen Chan, an equity analyst at investment bank Jefferies, recently said tight competition between Tencent Video and Baidu-backed iQiyi means that more lucrative advertising revenue and paying subscribers will likely be cornered by the two Netflix-style platforms.
WeChat, Tencent’s vastly popular mobile messaging-social media-and-payments platform known as Weixin on the mainland, reached 980 million users at the end of September to help drive up usage for Tencent’s digital content business.
“The listing of our online literature platform, China Literature, in November reflects the value of our years of investment in the business,” Tencent’s Ma said.
Shares of Tencent were down 1.3 per cent on Wednesday to close at HK$383, a day after it reached a new high of HK$388.
Morgan Stanley recently raised Tencent’s 12-month share price target to HK$420, up 14 per cent from its previous estimate.
Additional reporting by Celia Chen


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Tencent Holdings

Games, online video help Tencent top estimates with 69pc gain in third-quarter earnings

Company’s video unit has surpassed 43 million paying subscribers, the largest user base in China’s online video streaming market

An avatar is displayed in an arranged photograph of the Honour of Kings mobile game, developed by Tencent Holdings Ltd., in Hong Kong, China, on Friday, Aug. 18, 2017. The mobile smash, where professional doppelgangers get paid to help newbies climb both social and gaming ladders, is expected to generate as much as $3 billion in revenue this year. Photographer: Justin Chin/Bloomberg

Tencent Video has become China’s top online video platform in terms of mobile daily active users and subscriptions, according to Tencent chairman and chief executive Pony Ma Huateng. Photo: AFP

Tencent poised to rub shoulders with Apple and Facebook as China’s first entrant to elite US$500 billion tech club

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WeChat mascots displayed inside Tencent’s office at the Creativity Industry Zone in Guangzhou. Photo: Reuters

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Technology is increasingly disrupting the traditional car-buying industry in China. Photo: Xinhua

Andy Zhang Xu'an, Chief Financial Officer of Beijing Bitauto Internet company (www.yiche.com), an enlisted internet company (NYSE:BITA), speaks during an interview in Beijing. 21JAN15 === Photo by Simon Song ===

Tencent’s China Literature most-profitable IPO debut in a decade after value soars as much as 100pc

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The four books in Zhang Muye's Ghost Blows Out the Light fantasy novel series. Photos courtesy of CMFU.com ***This photo was licensed for one time use only. PLEASE CLEAR THE COPYRIGHTS WITH THE OWNER BEFORE REPUBLISHING THIS IMAGE.*** .

People walk past a logo of Tencent Literature at a Tencent Interactive Entertainment stand during a book fair in Guangzhou, Guangdong province, China August 17, 2014. Picture taken August 17, 2014. REUTERS/Stringer ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA.

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People walk past a logo of Tencent Literature at a Tencent Interactive Entertainment stand during a book fair in Guangzhou, Guangdong province, China. Photo: Reuters

The icon for the Tencent Holdings Ltd. WeChat messaging application is seen in this arranged photograph taken in Hong Kong, China, on Thursday, Oct. 12, 2017. Regulators elsewhere may be clamping down on the financial industry's use of private messaging apps, but in China the practice is flourishing. Players in the country's $11 trillion bond market use personal accounts on WeChat and QQ for everything from distributing research to soliciting orders. Photographer: Justin Chin/Bloomberg

The icon for the Tencent Holdings Ltd. QQ messaging application is seen in this arranged photograph taken in Hong Kong, China, on Thursday, Oct. 12, 2017. Regulators elsewhere may be clamping down on the financial industry's use of private messaging apps, but in China the practice is flourishing. Players in the country's $11 trillion bond market use personal accounts on WeChat and QQ for everything from distributing research to soliciting orders. Photographer: Justin Chin/Bloomberg

Tencent’s 2,636 per cent rally in a decade explains why Asia’s stock boom is different this time around

An investor in front of an electronic board showing stock information at a brokerage house in Shanghai. Photo: REUTERS

Tech

Big Tech

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China Business

Company’s video unit has surpassed 43 million paying subscribers, the largest user base in China’s online video streaming market


Internet

Mobile gaming

Mobile payments

Update | Games, online video help Tencent top estimates with 69pc gain in third-quarter earnings

Company’s video unit has surpassed 43 million paying subscribers, the largest user base in China’s online video streaming market