Virus fears as Tencent net rises 19pc to 93b yuan

Tencent's (0700) net profit last year rose 19 percent from a year ago to 93.31 billion yuan (HK$103.2 billion), within market estimates, but warned the payment and the cloud businesses would be affected by the virus.

Non-IFRS net profit last year was 94.35 billion yuan, a 22 percent growth from 2018. Basic earnings per share were 9.856 yuan and a final dividend of HK$1.20 per share was declared. Revenue for 2019 grew 21 percent to 377.2 billion yuan, with online game revenues up 10 percent to 114.7 billion yuan.

The combined monthly active user accounts of Weixin and WeChat grew 6.1 percent from 2018 to 1.165 billion, with the smart device MAU for QQ sliding 7.5 percent to 647 million.

Its fourth quarterly earnings missed estimates, after China's economic slowdown eroded its core gaming business and video content costs spiked.

Net income surged by 52 percent year-on-year to 21.6 billion yuan in the quarter ended December, compared with the average analysts' estimate of 22.8 billion yuan, while non-IFRS net profit was 25.48 billion yuan, rising 29 percent year-on-year.

Revenue in the quarter rose 25 percent year-on-year to 105.8 billion yuan, with smartphone games revenue rising 37 percent to 26 billion yuan but PC client games revenue down 7 percent to 10.4 billion yuan.

Martin Lau Chi-ping, president of Tencent expected the cloud business would be challenged with slower economic activities, but said it would recover as demands for remote working and medical services increase in the longer run.

The pandemic has also impacted revenues from payment services in the short term, he said, but predicted the drop would be offset as people resume their work this month.

The daily active user accounts of Tencent Meeting have exceeded 10 million within two months since its launch last December as more people work from home, the company said.

Lau said the social advertising revenue, which takes over 80 percent of the total advertising revenue, has seen growth during the epidemic, but media advertising revenue was impacted.

Hong Kong's equity traders have been buying Tencent derivatives to protect against losses, with bearish puts now costing the most in four years relative to bullish contracts.

However, mainland traders have remained bullish, boosting their holdings by 24 percent since the start of the year. They own about 2.3 percent of Tencent's listed shares, the highest proportion in at least three years, according to data compiled by Bloomberg.