Tencent warns of ‘difficult’ macro environment in spite of better performing quarter
To manage the situation, Tencent would seek to maintain a ‘healthy although not super rapid rate’ of growth by adjusting the rate of its own advertising inventory growth and help advertisers better target users.
Chinese gaming company's group’s chief strategy officer James Mitchell Tencent thinks the macro environment will remain difficult for the rest of the year, he said in an earnings call on Wednesday.
The unoptimistic view is in spite of the better-than-expected 35% jump in quarterly profit for the second quarter. Tencent reported a 24.14 billion yuan (S$4.7 billion) net profit for the three months of April to June this year, above the estimates of 20.74 billion yuan in a Reuters poll.
Tencent’s chief strategy officer James Mitchell said in an earnings call in a Reuters report: ‘Our assumption is that the macro environment will remain difficult for the rest of the year and that the situation of the heavy supply of advertising inventory will continue for the rest of the year and potentially into next year.’
Mitchell said Tencent would seek to maintain a ‘healthy although not super rapid rate’ of growth by adjusting the rate of its own advertising inventory growth. It will also attempt to help advertisers better target users.
The group’s smartphone gaming revenue bumped up 26% to 22.2 billion yuan, helped by popular gaming titles such as “Honour of Kings” and “Perfect World Mobile”.
The firm had launched 10 new smartphone games in the second quarter, compared with only the launch of one game in the first quarter.
Tencent’s desktop games revenue meanwhile, slipped 9%, to 11.7 billion yuan.
The group met with its slowest annual profit growth in 13 years last year due to a regulatory clampdown on new games by the Chinese government to curb gaming addiction.
The regulatory hurdle last year also caused the firm’s shares to plunge over 20% in market value. Compared with the trading price of HK$433.20 on January 5, 2018 to the trading price of HK$310 on December 28, 2018, the group’s shares have fallen by 28.4%.
But the resumption of approvals in December last year returned the fortunes for the mobile gaming giant.
As of Thursday’s (August 15, 2019) share price of HK$330, the group’s shares have risen by 7.6% year-to-date, from HK$306.60 on January 2, 2019.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Act on stock opportunities today
Go long or short on thousands of international stocks with CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
