Tencent's (0700) net profit rose 89 percent year-on-year to 38.54 billion yuan (HK$45.1 billion) in the third quarter, beating market expectations, as its revenues from games soared.

Its non-IFRS net profit in the third quarter surged 32 percent year-on-year to 32.3 billion yuan.

Basic earnings per share were 4.059 yuan.

"Games were way ahead of expectations. This is important as it is the most profitable part of the business within Tencent," Daiwa Capital Markets analyst John Choi said.

Tencent chairman Pony Ma Huateng commended the company's staff for "their relentless efforts and commitment despite the challenges in 2020," and said the tech giant remained committed to building a "sustainable ecosystem in the consumer internet and industrial internet sectors."

Third-quarter revenue soared 29 percent to 125.45 billion yuan from a year before, and revenue from value-added services increased by 37.87 percent year-on-year to 69.8 billion yuan.

Online game revenues grew by 45 percent year-on-year to 41.42 billion yuan, mainly driven by the revenue growth of domestic titles such as Peacekeeper Elite and Honour of Kings, as well as overseas titles.

Revenues from fintech and business services increased by 24.28 percent to 33.26 billion yuan in the third quarter from a year before, mainly due to higher revenues from commercial payment and wealth management, while business services revenue growth slowed down.

Revenues from online advertising increased by 16.25 percent to 21.35 billion yuan from a year ago, benefitting from wider adoption of algorithmic advertisement buying solutions, as well as rapid demand growth from categories such as education, internet services and e-commerce platforms, and recovered demand from sectors such as real estate and automobiles.

Social and others advertising revenues grew by 21 percent to 17.75 billion yuan, primarily driven by higher revenues flowing from Weixin Moments, as well as revenue growth from its mobile advertising network benefitting from higher eCPMs as advertisers responded favorably to video format advertisements, it said.

Media advertising revenues fell 1 percent to 3.6 billion million.

Tencent said cloud and other business services revenue were affected by the lingering impact of the pandemic, causing delays in project deployment and new contract sign-ups, as well as by non-recurring adjustments to certain IaaS contracts.

Tencent also said the clamp on internet micro-lending would not have much on an impact on its fintech business.

Ma Huateng says Tencent remains committed to building a ‘sustainable ecosystem in the consumer internet and industrial internet sectors.’ BLOOMBERG

Tencent profit skyrockets 89pc to 38b yuan on games boom