Tencent surges as profit beats estimates on mobile games, ads
Asia's top internet company sees profit jump 60pc, driven by online games and ad revenue
Shares of Tencent, Asia's largest internet company, jumped the most in more than two years after first-quarter profit soared because of online game sales and advertising revenue from its WeChat and QQ messaging services.
The Shenzhen-based company rose as much as 8.95 per cent as shareholders approved a five-for-one share split. The stock closed up 5.85 per cent at HK$108.80 yesterday.
Tencent's net income soared 60 per cent to 6.46 billion yuan (HK$8 billion) in the three months to March, helped by one-time gains, beating the 4.86 billion yuan analyst estimate.
The company is adding services to software applications including WeChat, known as Weixin on the mainland, as it competes with Alibaba and Baidu.
Tencent is counting on messaging, e-commerce and online games to win a bigger slice of the mainland's 618 million internet users as they migrate towards content on their smartphones.
"Tencent has a great advantage in promoting and distributing its mobile games because it has platforms like WeChat that have a huge user base," said Li Yujie, an analyst at RHB Research Institute.
Non-GAAP profit rose 29 per cent to 5.19 billion yuan, president Martin Lau Chi-ping said, adding that the alternative earnings measure provided a better picture of the quarter's performance. "We've proved that a good mobile platform that provides a lot of user interaction, that captures a lot of usage, will have a lot of monetisation potential."
