SHANGHAI (Reuters) -Chinese gaming and social media giant Tencent Holdings beat forecasts with a 29% jump in second-quarter profit, helped by an increase in revenue from popular games and growth in online advertising sales.
Robust demand for games such as “Honor of Kings” and “PUBG mobile” offset a decrease in revenues from its battle royale title “Peacekeeper Elite”.
Net profit for the three months through June came in at 42.6 billion yuan ($6.6 billion), above a Refinitiv consensus estimate of 34.4 billion yuan. Profit was also boosted by an increase in the fair value assessment of some of the companies Tencent has invested in.
Revenue jumped 20% to 138.3 billion yuan with sales from mobile games up 13%.
The results follow a number of setbacks Tencent has experienced as a result of regulatory actions Chinese authorities have unleashed on the tech industry and other sectors.
Tencent has been barred from entering into exclusive music rights agreements and saw its $5.3 billion plan to merge DouYu International Holdings Ltd and Huya Inc blocked by China’s market regulator last month.
Shares in the world’s largest gaming firm by revenue also took a battering after a state media article described online games as “spiritual opium” and expressed concern about their impact on children.
As a result, Tencent temporarily lost its crown as Asia’s most valuable company to chipmaker TSMC earlier this week and its shares are down some 8% since the Aug. 3 article.
Tencent has since announced new measures to reduce the time and money children spend on games, starting with its most popular game, “Honor of Kings.” It said in Wednesday’s earnings statement the moves went “beyond regulatory requirement.”
It also emphasized that it was increasingly offering its technologies and expertise to companies and public services in an effort to contribute to the economy and society.
Some analysts have said that the market has overreacted to state media criticism of the gaming industry, noting that government calls to protect minors were not new and such players accounted for a small percentage of online gaming revenues.
Players aged under 16 accounted for only 2.6% of its gross game receipts in China during the second quarter, Tencent said.
($1 = 6.4805 Chinese yuan)
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