Tencent Holdings Ltd (HKG: 0700) is the undisputed leader of the social media sector in China. With a market capitalisation of HK$4.02 trillion or roughly US$520 billion, the social media and gaming giant is among the world’s top ten largest companies. The company share price fell 20% in the first quarter of 2020 as the stock market reacted to the Covid-19 outbreak. Since then, its share price has rebounded by about 30%. In this article, we take a closer look at Tencent’s latest quarterly earnings, its key business segments, growth prospects, and potential risks.

Tencent’s Key Online Platforms. Source: 2020 First Quarter Results Presentation Headline Figures Tencent reported a net profit of RMB29.8 billion in quarter one results, 6% higher year-on-year. Revenue increased by 26% to RMB108.1 billion. This is largely due to much higher revenue from the online games segment.

Source: 2020 First Quarter Results Presentation Online Games The Key Revenue Contributor Online Games is the largest revenue segment as it contributed 35% of the quarter’s...