Tencent Holdings’ revenue beat expectations after Covid-19 lockdowns propelled gaming sales to their fastest pace of growth since 2017, sending shares surging in Hong Kong.
The WeChat operator’s revenue rose 26 per cent to 108.1 billion yuan (Dh55.7bn/$15.2bn) after online gaming sales leapt 31 per cent during the coronavirus-stricken March quarter, helping offset shrinking ad budgets and a record Chinese economic contraction. Shares rose as much as 4 per cent Thursday, their biggest gain in more than a month.
The numbers underscore how Tencent’s among the more resilient of China’s internet giants thanks to its bread-and-butter gaming division, which rode an upswell of spending from homebound players in the world’s largest gaming arena. But the company warned those gains could peter out as China returned to normality and went back to work, while global macro uncertainty may continue to depress spending by corporations on online advertising.
Ad spending on “long-form video from multinationals has seen a substantial step-down", chief strategy officer James Mitchell told
analysts on a conference call, adding those clients account for about half the business. “You should expect media advertising revenue to be under pressure in the second quarter of the year.”
Tencent offered the first glimpse of how China’s giant internet industry fared during the pandemic. It gained more than $42bn in market value since Covid-19 first broke out, defying a global market rout to outperform peers like Baidu and Alibaba Group.
A surge in social media and gaming traffic drew new ad revenue to help offset shrinking traditional online marketing budgets. Tencent’s total smartphone games revenue surged 64 per cent during the first quarter, helped by the consolidation of Clash of Clans maker Supercell. Revenue at Tencent’s burgeoning fintech division slid from the previous quarter after merchants shut their doors, but began recovering from April as activities in China resumed.
“It may be challenging for Tencent to sustain the first quarter’s strong growth into the next quarter as the pandemic retreats in China and online game players return to work,” Bloomberg Intelligence analyst Vey-Sern Ling said. “Lingering industry and macro headwinds may also dampen ad sales ahead.”
After the results, shares in major shareholder Naspers and the entity that holds its internet assets, Prosus NV, rose more than 5 per cent to a record.
But longer term, the world’s largest game publisher is contending with renewed challenges from the likes of ByteDance and Alibaba.
While Tencent’s core online entertainment business must convince consumers to keep splurging on aging cash cows like Honor of Kings, rival ByteDance is luring users and advertisers away and into its viral social networks. It’s also preparing to enter hardcore gaming.
It’s in cloud and fintech where Tencent faces possibly its fiercest battle with Alibaba. Parts of those units, which made up more than a quarter of the company’s revenue in 2019, are expected to bounce back over 2020 and resume driving its longer-term expansion. Alibaba-backed Ant Financial’s Alipay is also seeking to attract more merchants and transactions in part by replicating the lite-app model WeChat pioneered.
Alibaba and ByteDance will also fight fiercely for online advertising, which remain vulnerable to economic shocks if Covid-19 persists.
“WeChat’s Moments ads are really designed for big brands, and we see risk that they are cutting budgets under intense pressures on cash flows,” said Richard Kramer, an analyst at Arete.
The specs
Engine: 6.2-litre V8
Transmission: seven-speed auto
Power: 420 bhp
Torque: 624Nm
Price: from Dh293,200
On sale: now
Zayed Sustainability Prize
Killing of Qassem Suleimani
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
UAE currency: the story behind the money in your pockets
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UAE currency: the story behind the money in your pockets
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Killing of Qassem Suleimani
Killing of Qassem Suleimani
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
Killing of Qassem Suleimani
More from Rashmee Roshan Lall
Best Academy: Ajax and Benfica
Best Agent: Jorge Mendes
Best Club : Liverpool
Best Coach: Jurgen Klopp (Liverpool)
Best Goalkeeper: Alisson Becker
Best Men’s Player: Cristiano Ronaldo
Best Partnership of the Year Award by SportBusiness: Manchester City and SAP
Best Referee: Stephanie Frappart
Best Revelation Player: Joao Felix (Atletico Madrid and Portugal)
Best Sporting Director: Andrea Berta (Atletico Madrid)
Best Women's Player: Lucy Bronze
Best Young Arab Player: Achraf Hakimi
Kooora – Best Arab Club: Al Hilal (Saudi Arabia)
Kooora – Best Arab Player: Abderrazak Hamdallah (Al-Nassr FC, Saudi Arabia)
Player Career Award: Miralem Pjanic and Ryan Giggs
What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
UAE v Ireland
1st ODI, UAE win by 6 wickets
2nd ODI, January 12
3rd ODI, January 14
4th ODI, January 16
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
KILLING OF QASSEM SULEIMANI
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
