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China’s largest company, the social media, games and entertainment giant Tencent achieved net profits of RMB47.7 billion ($7.39 billion) in the first three months of the year. That was an increase of 65% on the comparable period last year when coronavirus was at its peak in China. It was a 19% decrease from the fourth quarter of 2020.
Revenues in the January to March period were up by 25% to RMB135 billion ($20.9 billion) year-on-year, but only 1% higher than the final quarter of last year.
The company achieved “notable growth for business services as well as online advertising revenue streams, while stepping up investment in areas including business services and enterprise software, high-production-value games, and short-form video,” according to management.
Its gigantic portfolio of share stakes in unlisted start-ups and listed operating companies delivered more mixed results. “Our listed investment portfolio experienced meaningful value appreciation, while contributing mixed results to our associate income, with certain investees delivering wider associate losses due to their investments in new initiatives such as community group buying activities,” the company said.
Tencent’s regulatory filing to the Hong Kong Stock Exchange made no mention of regulatory issues or penalties, though the fear of increased scrutiny of China’s internet sector has recently wiped some $200 billion from the value of Chinese tech stocks. It has been rumored that, following a $2.8 billion fine for rival Alibaba, Tencent could face penalty of perhaps $1.5 billion for monopolistic practices.
In the absence of that, Tencent reported upward business as usual trends. Subscriptions to value added services increased by 14% across video, music streaming and other products. That points to the company being able to hold on to gains made early last year when lockdowns and work-from-home conditions artificially favored digital services.
Tencent said that it now has 125 million subscribers for its streaming video services, an increase of 12% year-on-year. Although like for like comparisons of subscription numbers can be tricky, that points to clear daylight between Tencent Video and nearest rival iQIYI, which earlier this week reported 105 million subscribers (excluding trials). Tencent previously announced that it is “merging the Tencent Video and WeiShi teams to upgrade their algorithmic recommendations, bring integrated viewing experiences to users, and enrich short video clips adapted from (the) long form video library.”
The Weixin/WeChat social media platform expanded by 3% to 1.24 billion users.
– More to follow.
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