Tencent is reaping the rewards of marrying social media with mobile gaming.
China’s largest corporation has posted its fastest revenue growth in seven years and a record profit that surpassed estimates by 35%, thanks to its marquee hack-and-slash title Honour of Kings.
Investors bet in 2017 that some of the company’s boldest investments would finally pan out, creating one of the world’s most richly valued companies in the process. It tapped the spending power of some 200m players of Honour of Kings and other phone hits, helping mobile games revenue surpass that of desktops.
The still-nascent advertising and finance business on messaging app WeChat has also boosted confidence it can eventually become an ad powerhouse alongside Alibaba. “Mobile games revenue grew fast, benefiting from titles like Honour of Kings,” said Li Yujie, an analyst with RHB Research Institute in Hong Kong.
“Advertising business also topped our expectations and grew at a healthy speed,” he said. Tencent’s shares have gained 70% this year, against an 80% rise for New York-listed Alibaba. Naspers, which owns about a third of Tencent, gained up to 4.4%.
Honour of Kings allows users on WeChat to discuss strategy, pull in other friends and work together in competing for gaming glory.
Tencent is said to be taking the game to new markets, including the US. It reported a 70% surge in net income to a record 18.2bn yuan (€2.3bn) for the three months to the end of June on sales of 56.6bn yuan.
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