Tencent Holdings is scheduled to report second-quarter results on Wednesday. Here is what you need to know:
NET PROFIT: The Chinese videogame and social-media company's quarterly net profit likely jumped 58% to 41.47 billion yuan ($5.79 billion), according to the consensus estimate of 14 analysts in a FactSet poll. That would compare with 26.17 billion yuan in the year-earlier period.
REVENUE: Second-quarter revenue is expected to have risen 7.8% to 160.90 billion yuan, supported by its online gaming and advertising businesses.
Tencent's Hong Kong-listed stock has climbed 28% this year after gaining 23% in the second quarter. The robust debut of blockbuster title "Dungeon & Fighter Mobile," which Nomura said has consistently ranked No. 1 in terms of daily gross billing since its release in May, has boosted investor confidence and lifted Tencent's share price.
WHAT TO WATCH:
--GAMING REVENUE: Tencent's gaming segment likely staged a turnaround in the second quarter after several quarters of sluggish performance. Its second-quarter online gaming revenue likely increased 10% from a year earlier, driven by 9.6% growth in domestic game sales and 11% growth in overseas game sales, Nomura analysts said in a recent research note. Tencent's domestic gaming business was boosted by the DnF Mobile game and solid performances by other evergreen titles, they said.
--GROWTH STRATEGY: Tencent likely continued its high-quality growth strategy in the second quarter, focusing on high-margin revenue streams, such as video accounts. Besides the expected solid performance of its gaming business, Jefferies said in a note that revenue from the advertising business probably rose 17% from a year ago on Tencent's upgraded ad infrastructure, with enhanced data insights and better click-through rates of video accounts.
--OUTLOOK: Investors will be watching out for the company's guidance. Its third-quarter outlook will likely be stronger than the first half due to the continued deployment of AI technology and deeper penetration of ad budget spent on video accounts, Citi analysts said in a recent note.
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