(Bloomberg) — Shares of Tencent Holdings Inc. rose by the most since December after China's biggest internet company debuted one of the year's most anticipated mobile games earlier than expected.
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Tencent has set the launch date for Nexon's Arad Senki Mobile for China as May 21st. The flagship title is expected to revamp an aging pipeline, attract new users and reaffirm the Chinese government's accommodative stance on the world's largest gaming market.
China's social media leaders are searching for their next hit after years of tighter regulations that have shortened playback times and slowed development. DnF Mobile is not a sure bet. It will have to contend with rival titles from ByteDance Ltd and Genshin Studio's Mihoyo. But investors are hopeful that this famous series will eventually become a decent source of revenue.
“We expect gaming revenue to pick up in the second quarter of 2024,” Jefferies analyst Thomas Chong wrote in a note, adding that combat-oriented role-playing games will sell for 6 billion yuan ($828 million) annually. ) was predicted to have the potential to generate revenue. “Apart from DnF, Tencent has a number of emerging franchises to drive future growth,” he said.
In the Tokyo market, Nexon shares rose significantly for the first time in about two months. Tencent shares rose as much as 6.2% following Nexon's announcement, ranking among the top gainers in an index that tracks Chinese technology companies in Hong Kong. The rally coincided with news that the US government is closing in on a controversial anti-sale law that would force rival ByteDance to find a buyer for TikTok US or risk being shut down.
Tencent executives said they expedited the game's release after positive test results. The company expects the title's sales momentum to pick up after a weak first quarter. Sales of new casual title Dream Star have declined in recent months due to fierce competition from NetEase Inc.'s Eggy Party.
“The market will view this as a positive development for Tencent's Q2/H2 2024 gaming revenue,” Citigroup analyst Alicia Yap wrote in a note. She said, “The date is earlier than previously expected.''
Prosus NV, which backs Tencent, also saw its shares rise 4.7% in Amsterdam.
Bloomberg intelligence statement
Tencent's confirmation that it will release the long-awaited mobile version of Senki Arad Wars (DNF) on May 21st, assuming the title is well received, raises management's expectations for a second-quarter recovery in domestic gaming. This confirms that. Nexon's best-selling title received pre-registrations from over 60 million Chinese users ahead of its originally scheduled August 2020 release. DNF has over 850 million registered PC and console players worldwide.
– Robert Lee, Jasmine Liu, Analyst
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–With assistance from Zheping Huang and Paul Jarvis.
(Updates stock movements in fifth paragraph, adds Prosus stock in last paragraph.)
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