Earnings TCEHY: Gaming Boost Helps Revenues at Tencent Holdings Fire Higher

More Chinese people playing video games following the easing of government rules has helped boost revenues at tech giant Tencent Holdings (TCEHY).

Sales Shoot Up

The group reported a 13% rise in first quarter revenues to $25 billion, beating expectations of $24 billion, driven by a 24% hike in Chinese game revenues. It said big games such as “Honor of Kings” and “Peacekeeper Elite” had proved particularly popular.

Revenue from its international gaming business jumped 23% year-on-year helped by games such as “Brawl Stars” and “PUBG Mobile.”

Tencent has been helped by a continued easing in Chinese gaming regulations allowing more domestic and imported games from overseas to be approved for sale.

Social network revenue grew by 7% helped by music paid memberships and mini-game platform service fees.

Profit Misses Out

The company’s shares were down 1% however as a net profit of $6 billion, although up 14% year-over-year, missed expectations of around $7 billion.

Tencent also runs China’s biggest messaging app WeChat with monthly active users reaching 140.2 million, a slight increase of 3% compared to last year.

It said advertising revenues had climbed by a fifth year-on-year in the first quarter. This was due to “robust advertiser demand” for its video accounts, search and Mini Program product within WeChat. Mini Programs are apps hosted within WeChat.

Tencent said it had ramped up its spending on AI in the quarter including its AI chatbot Yuanbao, as well as its own foundational model Hunyuan.

“AI capabilities already contributed tangibly to our businesses, such as performance advertising and evergreen games,” the company said.

Is TCEHY a Good Stock to Buy Now?

Given the lack of analyst coverage for TCEHY stock, let’s take a look at its performance over the last three months. We see that it is up 6.39% over the last 12 months.