Tencent's new game set to be a 5b yuan force

Staff reporter

Morgan Stanley expects Tencent (0700)'s new game "Delta Force" will see 5 billion yuan (HK$5.5 billion) for its domestic turnover in the first year.

The broker estimated the game, being launched in mainland China on September 26, will reach an average daily active users of about 5 million, with an average monthly payment of 80 yuan.

The giant technology company is rated overweight by Morgan Stanley as well as becoming its preferred stock, with a maintained target price of HK$450.

Its peer CCB International expected increasing profitability in Chinese Internet companies for the rest of the year after most Chinese Internet companies improved their profit margins in the second quarter.

The margins are driven by a number of factors, including continued cost optimization and efficiency gains -- a shift in revenue mix -- and an improved competitive landscape, according to the broker's report.

It also reported that most companies see slower revenue growth due to uncertainty in the big picture and low consumer confidence, according to the broker's report.

In addition, last month, Black Myth: Wukong, a Chinese-made video game made by Shenzhen-based Game Science and backed by Tencent, sold 18 million copies in two weeks - one of the fastest starts the global gaming industry has seen. That record pace has in turn minted millions for its earliest and biggest investor.

It has also been acclaimed as China's first PC game to reach the standards of AAA games which are usually the result of high budgets committed by large publishers.

In other news, two of China's most prominent designers of AI chips are targeting initial public offerings in Shanghai as soon as this year, taking advantage of the growing appetite for domestic players seeking to challenge Nvidia Corp.

Furthermore, Beijing is encouraging Chinese automakers to export so-called knock-down kits to their foreign plants, the people said, meaning key parts of a vehicle would be produced domestically and then sent for final assembly in their destination market.

The instructions come as companies from BYD (1211) to Chery Automobile firm up plans to build factories in Spain, Thailand and Hungary as their innovative and affordable EVs make inroads in foreign markets.