Singapore/Hong Kong - Tencent Holdings, China's most valuable internet company, reported a record quarterly profit on Wednesday, driven by strong performance at its online games business and contribution from a US acquisition.
Tencent, which operates hit online games such as Dungeon & Fighter and Crossfire in China's red-hot market, faces stiff competition from Shanda Games, Netease.com and Changyou.com, and Renren in social gaming.
The company, which also runs the country's largest instant messaging platform and a social-networking portal, posted a 61% increase in first-quarter net profit to 2.87bn yuan.
That beat an average forecast of 2.34bn yuan from nine analysts polled by Thomson Reuters I/B/E/S.
Revenue rose 50% to 6.34bn yuan, beating an estimate from analysts of 5.91bn yuan.
Tencent said it booked a revaluation gain arising from its purchase of an additional stake in US game developer Riot Games.
The company also saw a 76.6% rise in online games revenue for the quarter driven by growth in its advanced casual games segment and Crossfire.
Tencent's rapid growth in the domestic market has left it hungry for more and the company has said it will aggressively invest overseas this year.
It also plans to work with mobile phone makers to develop devices that focus on its mobile applications. Earlier in the year, the company signed an agreement with Intel Corp to set up a research and development centre for new mobile-computing products.
Analysts say Tencent's push into mobile and social gaming and social networking is a prudent move as competitors such as Renren, which recently listed in New York, are flush with cash and ready for expansion.
Shares of Tencent, which is more than 30% owned by Naspers [JSE:NPN]
, Africa's biggest media group, have risen about 24% this year, outperforming a 1% rise in Hong Kong's Hang Seng Index .
The stock was flat before the results.
* Fin24 is a Naspers publication.