What’s new: Leading game company Tencent Holdings Ltd. on Thursday reported its financial results for the first quarter of 2021, with financial services emerging as the outstanding performer.
The company’s revenue grew 25% year-on-year to 135 billion yuan ($21 billion) for the three months through March, while its profit jumped 65% to 47.8 billion yuan, according to the report. However, much of the big profit jump came from a sharp increase in “other gains” on its report, which rose nearly fivefold to 19.5 billion yuan and were related to changes in the value of some of its investments.
The company said that on a non-IFRS basis, which excludes such gains, its first-quarter net profit increased roughly in line with its revenues, up 22% to 33.1 billion yuan.
Background: As China’s biggest internet company by market value, Tencent’s core game revenue has grown at relatively stable but unspectacular rates in recent years, including a 17% rise in the first quarter to 43.6 billion yuan — accounting for about a third of its total.
One of its better recent performers has been its fintech business, which grew by nearly 50% in the latest quarter year-on-year, taking its share of the company’s total revenue to 29% from a previous 25% over that period.
At the same time, Tencent and China’s other internet majors are facing potential headwinds from an increasingly assertive Chinese market regulator cracking down on anti-competitive behavior. Tencent’s music division was reportedly the subject of one such probe last year, though it escaped punishment after changing its business licensing practices.
Contact reporter Yang Ge (geyang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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