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Gaming And Messaging Drive Up Tencent Q4 Revenue And Stock

Tencent Holdings showed the growing maturity of China’s love for all things Internet with a fourth-quarter earnings report containing strong growth in online games and social networking revenue. Tencent ( TCEHY ) said revenue surged 45% in local currency to $4.7 billion, beating the consensus estimate of $4.3 billion. Tencent shares, which trade over the counter in the U.S., rose 4% to 20.36 Thursday. The company’s primary stock listing is in Hong Kong, where it is the heaviest-weighted component of the 50-issue benchmark Hang Seng index, accounting for more than 10% of the index. Profit fell slightly short in Q4 as Tencent continues to aggressively invest in video content and mobile operations. Tencent reported earnings per share minus items of 12 cents, up 21% from a year earlier, though the result was a penny short of the consensus estimates as polled by Thomson Reuters. The company reported a net profit of $1.1 billion, up from $905 million a year earlier. “The overall results were pretty strong, with mobile gaming really exceeding expectations,” said Henry Guo, an analyst at ITG Investment Research. “One concern is the money Tencent is spending to acquire video content, but management believes they have the scale to mitigate the bottom-line pressure of content costs.” In 2015, Tencent made heavy investments to expand its library of exclusive premium videos. Tencent has an exclusive partnership with the National Basketball Association to broadcast NBA games in China. Tencent also has an agreement with Walt Disney ( DIS ) to be the exclusive online distributor of the first six “Star Wars” movies. The expanding video catalog led to a six-fold increase in video subscriptions year over year, as mobile daily video views nearly doubled over that time, the company said. Tencent is among China’s Internet leaders, along with e-commerce king Alibaba ( BABA ) and search leader Baidu ( BIDU ). Other China Internet leaders include e-commerce company JD.com ( JD ) and NetEase ( NTES ), which is the second-largest gaming company in China by revenue, after Tencent. Despite a slowing China economy, its Internet leaders have continued to show healthy growth. On Feb. 24 NetEase reported Q4 earnings that beat estimates. JD.com reported Q4 earnings on March 1 that showed strong revenue growth and a smaller-than-expected loss. JD is the largest online direct-sales company in China. A year ago, JD formed a strategic partnership with Tencent. Alibaba also beat estimates when it posted Q4 earnings on Jan. 28. Alibaba provides e-commerce platforms used by businesses and individuals to sell goods and services. Its sprawling business includes cloud computing and mobile payment services. Chinese online travel agency Ctrip ( CTRP ) had a different story. It reported Q4 revenue Wednesday that jumped 50% in local currency and beat views, but the company’s Q1 revenue guidance widely missed expectations. At Tencent, revenue from online games, its largest revenue source, rose 33% to $2.46 billion in Q4, primarily driven by growth from smartphone games through its WeChat and QQ mobile platforms. Monthly active users for its QQ messaging platform for mobile increased 5% year over year to 853 million. Monthly active users on its WeChat mobile messaging service rose 39% to 697 million. Both products serve as a strong distribution platform for Tencent games and digital content offerings. They also send massive volumes of traffic to Tencent’s social networking service, enabling a boost in online advertising. Online advertising revenue rose 118% year over year to $880 million. “Our connection strategy has really extended WeChat and mobile QQ from being social communication tools to becoming platforms for games, publishing, social advertising, premium content distribution and provisioning of other online services,” said Tencent President Chi Ping Lau in the conference call with analysts. Revenue from its social network and messaging services rose 37% to $1.1 billion. The increase was mainly driven by growth in subscription revenue, as well as higher revenue from virtual item sales.

3 Chinese Internet Stocks Make Moves After Earnings

Loading the player… Let’s take a look at five Chinese tech stocks that are showing compelling chart action: Ctrip, Qunar, Tencent, Alibaba and Baidu. Chinese online travel agency Ctrip ( CTRP ) reported fourth-quarter revenue that jumped 50% in local currency to beat views. Packaged tour revenue growth was lighter than expected. The company’s first-quarter revenue guidance widely missed expectations. Shares dropped as low as 39.52 in heavy volume, breaching its 50-day and 200-day lines in intraday trade. But as the stock pares its losses to a 0.5% drop to 42.42, it’s looking to find support at those levels. Ctrip is trading about 26% below its high reached last November. Ctrip owns a 45% stake in Qunar ( QUNR ), dubbed the “Kayak.com of China.” Qunar’s fourth-quarter results surpassed expectations late Wednesday. The company did not issue Q1 guidance. Shares seesawed Thursday, quickly reversing higher in the morning before paring their gains to a 1.6% rise. The stock is trading below its 50-day and 200-day lines. Those lines recently crossed, which is a bearish sign. Qunar is 35% below its late-December peak. Tencent’s ( TCEHY ) 45% quarterly revenue increase beat top-line estimates Thursday morning, boosted by strong growth in online games and social network services. The bottom line rose 21% in local currency but fell short as Tencent continues to aggressively invest in video and mobile. Shares surged 4% in light volume, hitting a nearly 4-month high. The stock is now trading 8% below its high of 22.15 reached last April, as it works on the right side of a consolidation pattern. Tencent’s rival Alibaba ( BABA ) is also consolidating. Alibaba, up 0.9% in afternoon trade, is trading 14% below a potential buy point at 86.52. Baidu ( BIDU ), a third Chinese Internet giant, will soon test autonomous cars in the U.S. – potentially rivaling Alphabet ( GOOGL )-owned Google. Baidu wants to introduce a commercial car model by 2018. Shares are working on a deep cup base with a 218.07 buy point. The stock is trading 18% below that level, edging higher Thursday afternoon.

Tencent Q4 Revenue Surges, Fueled By Gaming And Messaging

Strong growth in revenue from online games and social network services in China helped Tencent Holdings ( TCEHY ) deliver stronger than expected revenue when it reported fourth quarter earnings Thursday morning. Tencent reported revenue of $4.7 billion, beating the consensus estimate of $4.3 billion and up 45% year over year in local currency. Profit fell short as Tencent continues to aggressively invest in video and mobile. Tencent reported earnings per share minus items of RMB0.76, up 21% from a year ago. Equal to 12 cents at the current exchange rate, EPS missed the consensus estimate by a penny. Tencent is among China’s Internet leaders along with e-commerce king Alibaba ( BABA ) and search leader Baidu ( BIDU ). Other China Internet leaders include  e-commerce company JD.com ( JD ) and gaming company NetEase ( NTES ). Tencent shares traded over the counter in the U.S., were up 2.5%, near 20, in morning trading in the stock market today . Its primary stock listing is in Hong Kong, where it is a component of the blue-chip Hang Seng index. Revenue from online games, its largest revenue source, rose 33% to $2.46 billion, primarily driven by growth from smartphone games. The result was helped by an expanded game portfolio as well as higher revenue from PC games, thanks to popular titles and new games launched in 2015. Revenue from its social network and messaging services rose 37% to $1.1 billion. The increase was mainly driven by growth in subscription revenue as well as higher revenue from virtual item sales.