Tencent in big revenue miss – Naspers, Prosus tumble

Chinse gaming and social media giant Tencent Holdings reported virtually no growth in first quarter revenue, its worst-ever such performance, and also missed market estimates as China’s economic slowdown and a freeze on new game licences weighed on its business.

Revenue totalled C¥135.5-billion (R320.8-billion) in the quarter ended March, versus C¥135.3-billion in the same quarter last year, and below an average estimate of C¥141-billion from 16 analysts, according to Refinitiv.

Tencent, which makes much of its money by developing games such as Honour of Kings and Call of Duty Mobile, said profit attributable to equity holders of the company for the quarter also fell 51%. It marks the biggest profit decline since the company went public in 2004, according to Refinitiv data.

The slowing pace of growth tracks two previous quarters of softening sales. Tencent — China’s most valuable company — has seen expansion opportunities clipped by a regulatory crackdown by Beijing to rein in the influence of large Internet firms.

The Shenzhen-based tech giant has been impacted by user spending on games normalising after a surge over the past two years. Meanwhile, a Covid-19 resurgence in China has also dampened payment activities.

The news sent shares in Tencent’s largest shareholder, Amsterdam-listed Prosus, tumbling. Prosus parent Naspers also fell sharply in trading on the JSE in Johannesburg.

At of 10.40am South African time, Prosus was trading down 3.6% at E45.16/share; Naspers was down 4.7% at R1 599/share.  — Josh Ye, (c) 2022 Reuters, with additional reporting (c) 2022 NewsCentral Media