China's Tencent second-quarter profit falls 2 percent, first decline in nearly 13 years


(Photo: CGTN)

Chinese technology giant Tencent Holdings Ltd on Wednesday reported a surprise two percent fall in second-quarter net profit, the first decline in nearly 13 years, due to slower than expected gaming growth and weak investment gains.

China’s largest social media and gaming firm said April-June profit fell to 17.87 billion yuan (2.59 billion US dollars), lagging the 19.67 billion yuan average of 12 analyst estimates compiled by Thomson Reuters.

The outlook for the most valuable company listed in Asia has been overshadowed by a slowdown in mobile gaming and concerns over regulatory setbacks as the Chinese regulators this week blocked Tencent’s sale of the blockbuster game “Monster Hunter: World” upon its debut.

Tencent said it would try to reinvigorate its mobile game revenue growth by extracting more value from existing popular titles, launching more role-playing games, and publishing more of its China-developed games internationally.

Mobile gaming revenue rose 19 percent year-on-year in the June quarter to 17.6 billion yuan, representing a quarter-on-quarter decline of 19 percent. The company blamed that on “non-monetization of popular tactical tournament games and timing of new game releases."

Amid an industry-wide freeze on new game approvals in China since March, Tencent has yet to receive the license to sell survival-themed game PlayerUnknowns’ Battlegrounds and to introduce Fortnite, a tactical tournament game developed by its portfolio company Epic Games.

Trading in its shares has been volatile this year. Since the stock peaked in January, Tencent has lost around 170 billion US dollars in market value.

Revenue rose 30 percent to 73.68 billion yuan in the latest quarter, lagging 16 analysts’ average estimate of 77.5 billion yuan. That represented the slowest quarterly revenue growth since the second quarter of 2015.

Revenue from PC games dropped five percent year-on-year and eight percent quarter-on-quarter.