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Tencent hits all-time profit high on revenue from mobile games

2014-05-15 11:09 Global Times Web Editor: Qin Dexing

Tencent Holdings, the home of China's favorite mobile messaging service, said first-quarter net income rose 60 percent, surging beyond estimates as revenue from smartphone games helped deliver the company's best growth in three years.

The profit boost comes as Tencent looks to find more ways to cash in on the explosive growth of the near-ubiquitous WeChat messaging platform, turning smartphone users into shoppers buying digital and physical goods.

Worth over $120 billion by market value, Tencent is China's largest listed tech firm and has become the biggest potential rival to Alibaba Group Holding, the Chinese e-commerce giant readying itself for a blockbuster US listing.

Tencent said on Wednesday its net income soared to 6.46 billion yuan ($1.04 billion) in the three months ended March from 4.04 billion yuan a year earlier, its largest-ever quarterly profit. Analysts had forecast profit of 4.93 billion yuan.

For now, Shenzhen-based Tencent makes most of its money from the division which includes its video gaming business and sales of digital goods. But Tencent has already spent more than $1.2 billion in areas like e-commerce, real estate and digital mapping since the beginning of 2014, as it looks to develop WeChat - Weixin in Chinese - as a gateway for all users' needs.

Investments include a tie-up with JD.com Inc, ranked a distant second behind Alibaba in China's online retail market and now heading for its own New York listing which could raise as much as $1.7 billion.

Revenue growth was also the fastest in three years, leaping to 18.4 billion yuan in the quarter from 13.5 billion yuan a year earlier.

Global monthly active users of WeChat grew 11.5 percent from the previous quarter to 396 million.

The division that includes the lucrative gaming business saw a 35 percent jump in revenue, boosted by success in sales of games for smartphones distributed over hugely popular mobile messaging app WeChat.

Total revenue for smart phone games tripled to over 1.8 billion yuan from the previous quarter, Tencent said in its earnings statement. In April, it agreed to add King Digital Entertainment's "Candy Crush Saga" to the stable of WeChat games.

The earnings may also allay concern among some analysts that Tencent's profit margins might be shrinking. The surge in net income helped deliver the best margins since the first quarter of 2011.

The numbers were released after Tencent shares closed up 1.3 percent in Hong Kong trading on Wednesday.

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