Tencent shares soar on early release of hotly anticipated mobile game

MW Tencent shares soar on early release of hotly anticipated mobile game

By Barbara Kollmeyer

Shares of Tencent Holdings Ltd. saw their biggest one-day gain in nearly a year on news the Chinese tech giant plans an earlier release of a hotly anticipated mobile video game.

Tencent (HK:700) will release "Dungeon and Fighter: Origin" game on May 21, the game's developer, Korean-based Nexon Games (KR:225570) said in a press release. DNF, originally a computer game launched in 2005, has more than 850 million registered players worldwide, with gross revenue to date over $22 billion, said Nexon.

"Based on the enthusiastic player response to the Beta Test we offered earlier this year, and the strong marketing campaign planned by Tencent, we strongly believe Dungeon&Fighter Mobile can energize our large base of existing fans and attract new players to the franchise," said Junghun Lee, president and CEO of Nexon.

Tencent had said in March that it would fast track the game after positive test results, with aims for a second quarter launch.

Jefferies analysts said in a note on Monday that they expect DnF mobile to reach annual grossing revenue of RMB6 billion ($828.7 million). Thomas Chong and Zoey Zong said softness in Tencent's first-quarter gaming revenue is already reflected in shares and largely due to a high base effect for last year's "Honor of Kings" multiplayer online game.

"Apart from DnF, Tencent has a number of emerging franchises to drive future growth. In our coverage universe, we reaffirm Tencent as our top pick for its high quality growth, backed by diversified business models and margin expansion story," they added.

DnF was in a batch of imported game titles approved by the Chinese government in February. It had been expected to launch back in 2020, but got caught up in a Beijing crackdown - the government's concerns have in the past been focused on youth addiction and vision problems.

A freeze on new games was imposed in 2021, then lifted later in 2022 for Tencent and NetEase. A more conciliatory tone from the government emerged in late 2023.

Shares of Tencent surged over 5%, the best session since a 6.1% gain seen in late July 2023. The stock is up around 9% so far this year. Nexon shares rose 2.4%.

Tencent minority investor Prosus (NL:PRX) rallied in Amsterdam trade.

The Hang Seng HK:HSI climbed 1.4% on Monday.

Tencent is the parent of Tencent Music Entertainment Group $(TME)$, whose shares could be active on Monday.

-Barbara Kollmeyer

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April 22, 2024 04:53 ET (08:53 GMT)

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