Hong Kong - Tencent Holdings posted record third-quarter profit as the Chinese Internet company withstood a slowing domestic economy through the popularity of online games and streaming HBO shows.
Net income climbed to 7.45 billion yuan ($1.2 billion) in the three months ended September, the Shenzhen-based company said Tuesday. That compares with the 7.5 billion-yuan average of 11 estimates compiled by Bloomberg.
Developing the WeChat and QQ messaging platforms beyond their roots into games and a social network boosted revenue growth and helped founder Ma Huateng reach more than 1 billion users with content including NBA games. That is fuelling a push to add new services, show more content like James Bond movies and expand into finance as Tencent battles Alibaba Group and Baidu for China’s 668 million Web users.
“Mobile game performances were pretty strong,” said Jeff Hao, a Hong Kong-based analyst at China Merchants Securities Holdings. “The company introduced some popular titles in the third quarter.”
Sales rose 34 percent to 26.6 billion yuan, compared with analyst estimates for 25.4 billion yuan.
Shares of Tencent fell 1.1 percent to HK$150.40 in Hong Kong before earnings were announced. The stock has gained 34 percent this year, compared with a 22 percent drop for New York- listed Alibaba.
Tencent’s content deals include streaming rights for National Basketball Association games, Sony Music Entertainment songs and Time Warner Inc.’s HBO network. Last week, the company added the exclusive online rights in China for the complete Bond franchise.
Tencent pays for the rights to online streaming in China and generates revenue from advertising. That business model is used because subscription TV isn’t as widespread in China as it is in the US and Europe.
After struggling to compete with Alibaba in e-commerce, Tencent folded its online retail assets into a venture with JD.com to create a stronger second-ranked operator.
BLOOMBERG