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Tencent profit beats estimates as WeChat games drive growth

2018-01-15T043932Z_634789601_RC1E4D432A30_RTRMADP_3_WECHAT-STRATEGY.JPG
Tencent Holdings Ltd posted quarterly profit that beat estimates, bolstered by mobile game blockbusters like Honour of Kings and a growing ad business.

[HONG KONG] Tencent Holdings Ltd posted quarterly profit that beat estimates, bolstered by mobile game blockbusters like Honour of Kings and a growing ad business.

China's largest company almost doubled net income to a record 20.8 billion yuan (S$4.33 billion) in the three months ended December. That compares with the 16.6 billion-yuan average of estimates compiled by Bloomberg. Sales for the quarter were 66.4 billion yuan, short of projections for 68.6 billion yuan.

Tencent's business revolves around its vast social networks WeChat and QQ, through which it distributes games, videos and music. The two messaging platforms now anchor nascent advertising and financial services businesses that've boosted confidence that the company will be able to sustain growth and - through fine-tuning various services - begin to grab a larger slice of an ads pie now dominated by Alibaba Group Holding Ltd.

"We expect Tencent's game momentum to remain robust in 2018, driven by a sustainable Honor of Kings contribution as well as other new successful launches," Morgan Stanley analysts led by Grace Chen wrote Tuesday. "More importantly, we expect advertising to outgrow online games in 2018, with media advertising to benefit from the revamp of its news feed product."

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Tencent's shares fell 0.9 per cent to HK$462.60 before the earnings were announced. They've gained 14 per cent this year.

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