Tencent Holdings shares
fell after its first-quarter profit missed expectations, though analysts broadly looked past the disappointment as they focused on the company’s longer-term growth potential. The stock fell as much as 3.9% on Thursday and was recently 1.1% lower at 339.00 Hong Kong dollars.
The Chinese tech giant on Wednesday said its first-quarter net profit rose 10% to 25.84 billion yuan ($3.69 billion). That compared with an expectation of CNY29.93 billion, according to a FactSet poll of analysts. Analysts said the disappointment was partly due to slower-than-expected advertising income growth and a sharp increase in tax expenses. Still, stronger-than-expected games business and financial services operations helped analysts shrug off the miss. “We view [first-quarter] result as stronger than expected, especially on the healthy recovery of domestic gaming revenue growth and fintech & business services revenue improvement,” Citi analysts said in a note. They were particularly optimistic about Tencent’s core gaming business. The segment’s revenue came in 11% above Citi’s estimates. “More encouragingly, Tencent highlighted robust grossing improvement for franchise titles and newly launched games, which bode well f …
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