Tencent, the company which owns Chinese messaging app WeChat, has nudged ahead of Alibaba as China’s most valuable tech company. Following the release of strong second quarter results this week, Tencent’s share price rose 6 per cent. Tencent is now worth US$247.6 billion, overtaking Alibaba’s market cap of US$240.8 billion.
Hong Kong-listed Tencent reported that second quarter profit rose 47 per cent to 10.9 billion yuan (US$1.6 billion) and quarterly revenue grew at its fastest rate in three years, increasing 52 per cent to 35.7 billion yuan (US$5.4 billion).
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The number of active WeChat and Wexin users grew to 806 million, up from 600 million last year. However local tech site, Tech in Asia suggests user numbers are likely to plateau soon, unless WeChat can crack a new international market.
Ma Huateng, Chairman and CEO of Tencent, highlighted the Chinese tech giant’s focus on content and entertainment services including music streaming and mobile games.
“We executed strategic initiatives to strengthen our ecosystem and to reinforce our ability to bring best in class entertainment content to our users,” he said.
For example, Tencent integrated QQ Music with China Music Corporation to create a leading online music platform in China. Tencent also acquired a majority stake in Supercell, the makers of mobile game Clash of Clans, from Softbank for US$8.6 billion. The deal expands Tencent’s presence in the global game industry and brings it closer to hundreds of millions of game players globally.
“We believe high quality content, coupled with Tencent’s user base, distribution capability and targeted recommendation technology, position us and our partners to help develop the fast
– changing digital entertainment market,” he said.
Revenue from online games grew 32 per cent year on year driven by smartphone games. While social network revenues increased 57 per cent driven by sales in virtual items such as subscription services in video and music.
New York- listed Alibaba reported last week, strong mobile growth and a rapid uptake of its cloud computing business helped revenues surge 59 per cent in the most recent quarter.