Tencent profit surges 35% in second quarter

Chinese tech giant gains on resurgence of its gaming arm amid new regulatory approval after a freeze for most of last year

Tencent has benefited from being allowed to make cash off new games titles. Reuters

Tencent Holdings posted a better-than-expected 35 per cent rise in quarterly earnings after Peacekeeper Elite became the gaming giant’s first break-out hit since it won regulatory approval to make money off new titles.

Net income rose to 24.1 billion yuan (Dh12.63bn) in the three months ended June, the Shenzhen-based company said on Wednesday, beating the average estimate of 21.1bn yuan compiled by Bloomberg. Adjusted earnings per share were 2.46 yuan, compared with the 2.39 yuan average projection.

Tencent is on track for accelerating growth in the second half thanks to hits such as Peacekeeper Elite and durable titles such as Honour of Kings. To fend off challenges from short video operator ByteDance, Tencent is adding content and services to its super-app WeChat, partnering with China’s largest Q&A platform Zhihu, and linking more users to its mini-programmes – lite apps that allow access to services from other companies, including ride-hailing, food delivery and bike sharing.

“We expect gaming revenue to re-accelerate starting from the second quarter onward,” said David Dai, an analyst at Bernstein in Hong Kong, adding this would also drive an acceleration of overall revenue.

Revenue rose 21 per cent to 88.8bn yuan, compared with analysts’ estimates for 93.4bn yuan. Shares of Tencent rose 1.8 per cent in Hong Kong before earnings were announced.