Chinese gaming and social media giant Tencent Holdings Ltd (0700.HK) reported a projected quarterly earnings increase of 65% on Thursday, while management reiterated the company’s focus on compliance as China tightened control over tech giants.
Tencent, the world’s top-selling gaming company, posted earnings of 47.77 billion yuan ($ 7.42 billion) in the three months to March, up on the average analyst estimate published by Refinitiv of 35.45 billion yuan.
The results can be attributed to the fact that the Chinese regulators tightened antitrust laws against internet giants and have already fined Tencent rival Alibaba (9988.HK) with $ 2.75 billion. Reuters reported last month that Chinese antitrust authorities ordered Tencent to pay a fine of more than 10 billion yuan, give up exclusive music rights and sell some of its musical assets. Continue reading
Tencent is facing regulatory scrutiny of its non-bank payments business with Alibaba subsidiary Ant Group.
A Tencent logo can be seen in Beijing, China on September 4, 2020. REUTERS / Tingshu Wang
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Responding to a question about general compliance, Tencent president Martin Lau said the company is very focused on compliance and risk management and is very cautious about the size of non-paid financial products. “When we look at internal reviews and when we … check that we are in line with the spirit of regulators, it is actually relatively manageable,” Lau said. Tencent is also facing increasing competition from ByteDance, the owner of TikTok, and the similar short video platform Douyin, which have made significant strides in the video game business.
Tencent also said Thursday that the company is investing in business services, games and short-form video content. Tencent, which generates 32% of its sales from video games, unveiled more than 60 new titles at its annual video game conference last week. There are plans to release a mobile version of its League of Legends game as well as a Pokemon game in collaboration with Nintendo (7974.T) later this year.
Sales rose 25% to 135.3 billion yuan, compared to market expectations of 134.39 billion yuan.
Online game sales increased 17%, according to Tencent.
($ 1 = 6.4355 Chinese yuan renminbi)
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