Tencent Holdings has racked up some impressive gains this week, becoming the first Chinese firm worth over $500bn (€426bn) and surpassing Facebook to be the world’s fifth-most valuable company.
Earnings for China’s biggest social network and gaming firm have surged on the popularity of its smartphone games led by titles such as Honour of Kings — a fantasy role-playing game, which has as many active players as the population of Germany.
Also driving earnings has been its messaging-to-payment superapp WeChat which has amassed 980m monthly active users, with 38bn messages sent daily. Its YouTube equivalent, Tencent Video, has become the video streaming service with the largest paying subscriber base in China.
That success has helped Tencent’s stock more than double this year, making it Asia’s most valuable company, worth $522bn and easily outpacing a 36% rise in the benchmark Hang Seng Index.
That beat Facebook’s market value of $519bn. Only Apple, with a market capitalisation of about $873bn, followed by Google owner Alphabet, Microsoft, and Amazon are worth more.
Led by Chinese billionaire Pony Ma, Tencent this month reported a better-than-expected 69% rise in third-quarter net profit.
“Tencent’s high growth, as demonstrated by its quarterly results, has supported the rally in its shares,” said Steven Leung, a sales director at UOB Kay Hian.
“Since the company has been able to deliver with its earnings, the stock is still worth holding onto despite its current high level.”
In addition to robust earnings, Tencent has also burnished its lustre after some units and affiliates have made some eye-catching market debuts.
An executive recently also said the company is close to making Malaysia the first foreign country to roll out its WeChat ecosystem, pitting it against Alibaba as they scramble for new growth opportunities outside China.
Among the 39 analysts who cover Tencent, the average rating on its shares is a “buy”, with their average target price at HK$433.60 (€47.3).
The stock closed at HK$430 yesterday.
After Tencent, rival Alibaba ranks second among Asian firms with a market value of $481.5bn, while South Korea’s Samsung is number three at $364bn.