Tencent’s net income accelerated sharply in the second quarter, but the Chinese internet giant’s sales were disappointing as a recovery for digital giants in China appears to be shaping up.
After years of staggering growth, the tech sector has undergone a brutal takeover by authorities in recent years to further regulate it. Last year weighed heavily on Tencent’s profitability.
This crackdown has caused the loss of billions of dollars in market capitalization since 2020 and has weighed on the performance of powerful internet companies.
A year ago, Tencent announced its first quarterly revenue decline since it went public in 2004.
After having abused it, the Chinese government has reaffirmed its support for this key sector in recent weeks, at a time when the economy is under pressure.
Against this backdrop, Tencent reported net income of 26.17 billion yuan (3.3 billion euros) in the second quarter, up 41% year on year.
This is his fastest pace of progress since 2021.
A mock performance because last year in the second quarter the confinement of the economic capital Shanghai and the crackdown on targeting tech had heavily penalized Tencent’s profit.
From quarter to quarter, it’s only increased by 1%.
Its revenue increased 11% year on year to 149.2 billion yuan (18.7 billion euros) for the April-June period.
But it is down from the previous quarter (-1%) and below the forecasts of analysts interviewed by the Bloomberg agency, who expected 152 billion yuan.
– Looking abroad –
Like other digital giants, Tencent has not been spared from the tightening regulations in China.
Essential for payments via its WeChat messaging app, the group was fined nearly 3 billion yuan (about 379 million euros) last month for various violations of banking regulations.
This sentence announced on the same day as that of its competitor Ant Group (owner of the Alipay system) seems to have marked the epilogue of the sector’s woes.
Last month, Chinese Premier Li Qiang received representatives of several technology companies to “hear” their opinions and suggestions.
Since last year, Tencent has re-licensed video games in China after a year-and-a-half hiatus, which had weighed heavily on its revenue.
These permissions are required to market a game on the world’s largest market.
Tencent has since sought other outlets abroad, particularly in Europe, where the company is strengthening itself with stakes in emblematic studios.
Last year the group had formalized a capital increase of the French giant Ubisoft.
Also present in artificial intelligence, Tencent has instead said nothing about its progress in designing in China an equivalent of ChatGPT, the American conversational robot addicted to artificial intelligence whose exploits are followed with passion.
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