Tencent Benefits from Lockdown Gaming Boom to Post $4.07 billion Net Profit

By Gina Lee

Investing.com – Shenzhen-based Tencent Holdings Ltd (HK:), which runs China’s largest social media platform as well as the world’s biggest gaming business, posted a better-than-expected 6% increase in first–quarter net profits on Wednesday.

The company reported first quarter net profits of CNY 28.9 billion ($4.07 billion), up from CNY 27.2 billion for the same quarter last year and beating analyst consumer forecasts of CNY 23.6 billion.

Its value-added-services segment, including online and mobile games, was the main growth engine, rising 27% to CNY 62.4 billion.

Revenue increased 26% to CNY 108.1 billion, up from CNY 85.5 billion a year earlier.

The growth was attributed to an upsurge in usage of online services such as cloud storage, collaborative tools and games as the lockdown imposed in China due to the COVID-19 virus. Millions of people used the services to work from home, educate their children with the closure of schools and keep themselves entertained.

But even with China claiming a relative return to normalcy at the beginning of the month in time for the Golden Week holidays, fresh outbreaks in the country point to a second wave of cases.

Tencent also warned of further challenges, as it said in Wednesday’s regulatory filing that it projected “some headwinds for the online advertising industry”.

Tencent’s Hong Kong shares jumped 2.01% to HK$436.60 ($56.33) by 12:33 AM ET (5:33 AM GMT), after opening at HK$443.60.