All fun and games for tech giant

Just when you thought Tencent couldn’t get hotter, its results (for the first quarter, this time) have yet again sent market analysts into a frenzy about the future of the tech gorilla.

With a market capitalisation north of Us$300bn, the Shenzen-based company has joined the ranks of the world’s most valuable tech firms, including Apple, Facebook and Google parent Alphabet.

Of the 50-odd Bloomberg analysts who rate the share, 48 have it as a “Buy” and two as a “Hold”.

It is in this context that Terry Pratchett’s famous quote comes to mind: “Always remember that the crowd that applauds your coronation is the same crowd that will applaud your beheading. People like a show.”

Renier de Bruyn, an investment analyst at Sanlam Private Wealth, says there is much surrounding Tencent to be positive about. The company has a long list of strategic investments and associates that allows it to do business in a wide range of sectors. Its many services include social networks, Web portals, e-commerce, online PC and mobile games, payment services and cloud computing services.

“Certainly on the social network side, it will be difficult for competitors to replace their QQ and Wechat services. What’s even more exciting is that they haven’t attempted to maximise the profitability from these services. They have rather focused on creating a great user experience. This means there is opportunity in the future to open up revenue streams,” says De Bruyn.

Wechat is China’s biggest messaging service. It has been able to achieve this due in part to China’s strict censorship laws. Facebook has been banned for seven years, and Google and Twitter have failed in that market.

“There is that advantage,” says De Bruyn, “but they also just know their market very well. This has been more beneficial for them.”

Jpmorgan analyst Alex Yao says Tencent’s first-quarter results confirmed its mobile gaming growth momentum but also demonstrated PC game sustainability.

“The company continues to improve its competitive position and market share in all of the