Tencent shares climb most in months
TENCENT Holdings Ltd. shares staged their biggest rally since December after China’s biggest internet firm nailed down an earlier-than-anticipated debut of one of the year’s most eagerly-awaited mobile games.
Tencent set a May 21 start date for Nexon Co.’s Dungeon & Fighter Mobile for China—a marquee title expected to refresh an ageing pipeline, draw in new users and reaffirm Beijing’s easing stance for the world’s largest gaming market.
China’s social media leader is seeking its next big hit after years of regulatory tightening that cut play times and slowed development. DNF Mobile isn’t a sure bet—it must contend with rival titles from Bytedance Ltd. and Genshin Impact studio Mihoyo—but investors expect the well-known franchise to eventually become a decent money-spinner.
“We expect gaming revenue to turn around in 2Q24,” Jefferies analyst Thomas Chong wrote in a note, predicting that the battleoriented role-playing-game may generate 6 billion yuan ($828 million) of revenue annually. “Apart from DNF, Tencent has a number of emerging franchises to drive future growth,” he said.
Nexon’s stock jumped by the most in more than two months in Tokyo. Tencent’s shares rose as much as 6.2 percent following Nexon’s announcement, ranking among the top gainers on a gauge tracking Chinese technology companies in Hong Kong. The rally coincided with news that Washington is closing in on a controversial divest-or-ban law that will force rival Bytedance to find a buyer for Tiktok US or risk getting shut down.
Tencent executives have said they fast-tracked the game’s release after seeing positive test results. It’s counting on the title to revive sales momentum after a soft first quarter. Sales of new casual title Dream Star declined in recent months thanks to fierce competition with Netease Inc.’s Eggy Party.
“Market likely to see this as positive development for Tencent 2Q/2H24 games revenues,” Citigroup Inc. analyst Alicia Yap wrote in a note. “Date is earlier than we previously expected.”
Prosus NV, a backer of Tencent, also saw its share gain as much as 4.7 percent in Amsterdam.