Tencent shares reach all-time high on strong second-quarter outlook

Founder and chairman Pony Ma Huateng sees value of his stake in the Shenzhen-based internet giant swell to HK$265.7bn

PUBLISHED : Monday, 07 August, 2017, 7:25pm
UPDATED : Monday, 07 August, 2017, 10:46pm

Shares of Chinese video games and social media giant Tencent Holdings reached an all-time high on Monday, driven by a strong outlook for its hit mobile game Honour of Kings and advertising revenue ahead of its second-quarter earnings report on August 16.

Tencent, the world’s largest video games company by revenue, saw its shares hit a record HK$321.40 in early afternoon Hong Kong trading before closing at HK$320.60, up 2.95 per cent.

The bullish equity market in Hong Kong have seen Tencent’s shares gain a total of 69 per cent year to date. Its market capitalisation reached HK$3.01 trillion (US$385 billion) on Monday.

That has made Tencent more valuable than US business software powerhouse Oracle Corp, which has a market cap of US$206.7 billion, and computer pioneer International Business Machines Corp (IBM), with a US$135.3 billion valuation.

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Tencent co-founder and chairman Pony Ma Huateng stands to profit handsomely from his firm’s strong equity performance.

Ma, who owns an 8.71 per cent stake in Tencent, saw the value of his shareholding balloon to as much as HK$265.7 billion on Monday, according to data from Bloomberg.

He was ranked third last year in the Hurun Rich List for China, behind Alibaba Group executive chairman Jack Ma Yun and property magnate Wang Jialin, the chairman of Dalian Wanda. New York-listed Alibaba owns the South China Morning Post.

Analysts expect the Shenzhen-based company to post solid second-quarter earnings on the back of its blockbuster mobile game Honour of Kings.

The fantasy role-playing game, which is based on Chinese historical characters, has more than 200 million players, despite recent criticism levelled against it by People’s Daily.

The state-owned newspaper had described the game as “poison” and a “drug” that was harming teenagers, which led to a sharp fall in Tencent’s share price early last month.

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Honour of Kings generated more than US$150 million revenue in June, making it the top grossing mobile game in the world that month, according to estimates by US research firm SuperData.

A research report from China Merchant Securities estimated that Tencent’s revenue from mobile games would grow 7 per cent from the last quarter.

The broker was also bullish on Tencent’s advertising revenue, which it estimated to post 38 per cent year-on-year growth in the second quarter.

That increase would follow the internet company’s introduction of sponsored content to its massively popular messaging service WeChat’s newsfeed, called Moments.

In May, Tencent enhanced the functions for domestic Chinese WeChat users by allowing them to synchronise their Moments contents simultaneously to Facebook and Twitter, which are banned on the mainland.