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Tencent
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Tencent posts better-than-expected first-quarter earnings on strong gaming growth

  • Shenzhen-based Tencent reported a net profit of US$4.1 billion in the first quarter, up 6 per cent from a year earlier
  • The results come amid the uneven recovery of China’s economy, which shrank for the first time in nearly four decades

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Internet giant Tencent Holdings warned of headwinds in China’s online advertising industry. Photo: Reuters
Iris DengandCelia Chen
Internet giant Tencent Holdings is predicting a sweeping structural change across China’s industrial landscape in the aftermath of the Covid-19 pandemic, with more enterprises expected to broaden their online operations.

Shenzhen-based Tencent, which runs the world’s biggest gaming business and China’s largest social media platform, already showed the resilience of its own online operation, as it posted on Wednesday a better-than-expected 6 per cent increase in first-quarter net profit on the back of its gaming activities.

“The biggest structural change for businesses and organisations is to realise they need online presence,” Tencent president Martin Lau Chi-ping said in a conference call with analysts, hours after reporting its earnings for the March quarter. “When everything is physically shut down and offline, it’s very important for businesses to have online access to their consumers and other internet users.”

China’s government is expected to increase investment in cloud infrastructure and other relevant technology to push that change, according to Lau, citing potential opportunities in online education and health care.

Such a move across a range of industries comes as China deals with an uneven recovery of its economy, which shrank for the first time since 1976 in the first quarter of this year amid extensive shutdowns to contain the spread of the coronavirus.

Tencent is considered one of the few beneficiaries of the pandemic, as millions of people in lockdown turned to games, cloud services, collaborative tools and other online services for entertainment, education or work.
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