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Chinese tech company Tencent posts 69% profit; could beat Facebook‘s net value

(FinancialPress) — China‘s tech darling Tencent (0700.HK) obliterated sales forecasts laid out by analysts for its third quarter of the year, posting an astounding profit of 18 billion RMB ($2.7 billion) out of a 65.2 billion RMB ($9.8 billion) revenue. After Wednesday‘s market close, its valuation stood close to $470 billion. Facebook (FB), one of the biggest companies in tech worldwide, stands at a value of $520 billion.
Expectations were set at 15.7 billion yuan and 61 billion yuan across the board for analysts polled by S&P Global Market Intelligence. The outstanding result hinges mostly on the excellent performance of its mobile and PC gaming units.
Profit rose 69% overall YoY, and revenue surged 61%, thanks to the aforementioned businesses.
The best performance was posted by the mobile gaming unit. It hit 18.2 billion RMB ($2.75 billion) – which signifies an 84% growth. Meanwhile, its older PC gaming unit reached a growth of 27% with sales for a value of 14.6 billion RMB ($2.2 billion).
Honour of Kings, owned by Tencent, is the most lucrative mobile app of the year – which greatly contributed to the result. Also owned by the company is ultra-popular PC game League of Legends. Both were lauded by the company, along with a few others, but sales data was not released.
Tencent‘s crown jewel, however, is probably WeChat, the wildly popular messaging app. It‘s reached 980 million monthly users when accounting for those of its sister service, QQ. Both services combined saw 38 billion messages being sent daily, representing a 25% YoY growth.
The huge engagement that the messaging app enjoys does not necessarily translate into immense revenue directly. The company depends on timeline advertising to profit from it, which goes directly into the firm‘s general ad business. The business in question grew 48%, for  value of 11 billion RMB. WeChat, however, does serve as a redirection tool for users to get to other of the company‘s services.
The company also has a video service, which competes directly with Alibaba‘s Youku Tudou. Tencent claims that its own service has dethroned the Jack Ma-owned content provider.

“We believe this success reflects our increasing investment in self-commissioned video content, our improved selection of licensed video content, and our scheduling and audience management initiatives,” CEO Pony Ma said in a statement.


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