Daily Management Review

Analysts wait for Tencent to grow again


08/14/2019


Tencent Holdings is expected to report improved financials during the quarterly report, while the market expects revenue growth and profits of the Chinese giant. It is assumed that mobile games will contribute to development of the company’s game business, while other areas, such as financial technology and cloud computing, should increase profits in general.



Chris Yunker
Chris Yunker
The market expects Tencent to report earnings in the second quarter on Wednesday. The main gaming business of the company and its financial technology division will lead to a significant increase in revenue.

The Chinese giant is expected to report revenue of 93.42 billion yuan ($ 11.9 billion) according to Refinitiv estimates. If this indicator is achieved, annual growth will be almost 27%. Earnings attributable to shareholders will increase 16% to 20.74 billion yuan ($ 2.64 billion), according to Refinitiv estimates.

As part of the previous corporate reporting season, Tencent reported the slowest sales growth since its IPO in 2004. This was largely due to the fact that last year, the profitable gaming business of the Internet company from Shenzhen suffered from regulatory measures by the Chinese government.

Release and monetization of video games in CHina must be approved by regulatory authorities. This hurt Tencent's business, which relies heavily (almost 41% in Q1) on online gaming revenue.

In 2018, capitalization shrunk by billions of dollars. At the beginning of the year, China began to approve games again, and a number of Tencent games received a green light. Shares of the company revived a bit and grew by more than 6% this year.

source: bloomber.com






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