Date
19 November 2017
Tencent management, including chairman Pony Ma (third from left) and president Martin Lau, pledged to allot more resources to boost the company's music and games businesses in overseas markets. Photo: HKEJ
Tencent management, including chairman Pony Ma (third from left) and president Martin Lau, pledged to allot more resources to boost the company's music and games businesses in overseas markets. Photo: HKEJ

Tencent may consider spinning off literature service unit

Tencent Holdings (00700.HK) is not ruling out a spin-off of its literature service unit, company president Martin Lau said.

Called Yuewen Group, the online publishing and eBook service is a joint venture between Tencent Literature and Cloudary Corp., China’s leading provider of Chinese online literature services.

The venture, which officially began operations on Monday, integrates several popular online reading platforms previously under the two firms’ respective brands.

The business has seen strong growth after the integration and, although there’s no clear timetable, the possibility of it being spun off and listed cannot be excluded, Lau said during Tencent’s annual results on Wednesday.

“Almost all the super-popular writers [who mainly publish their books online] have been signed,” he added.

Cloudary, a wholly owned subsidiary of Shanda Group, has been seeking to list its shares in the United States, People.com.cn reported, citing unnamed industry sources.

Tencent holds the majority stake in the venture, which operates largely independently from its two parents.

Heavy investments into digital content businesses is among the key aspects of the company’s efforts to cultivate a vibrant mobile ecosystem, the company said in a statement Tuesday.

Other efforts include improving online-to-offline (O2O) and transactional services, promoting the use of payment services through enriched payment scenarios, and optimizing performance-based advertising business. 

In addition, the internet giant said monthly active users of its popular messaging service Wexin, including its international version WeChat, has reached 500 million, up 41 percent from a year ago.

Meanwhile, the number of user accounts that bundled bank cards with the company’s Mobile QQ Wallet and Weixin Payment services has exceeded 100 million. Tencent partly attributed the surge to its “red packet” promotion during the recent Lunar New Year holiday.

Lau still sees a big room for growth for the payment services as the application scenario will be expanded, for example, through its O2O business.

To boost the penetration of WeChat abroad, Chairman Pony Ma said the company will allot more resources to develop music and games services in overseas markets, as advertising is not quite effective in driving user base growth at its current stage.

Tencent said last year’s net profit rose 54 percent to 23.81 billion yuan (US$3.89 billion) while revenue was up 31 percent at 78.93 billion yuan. Basic earnings per share reached 2.58 yuan.

Net margin increased to 30 percent from 26 percent. The board proposed a final dividend of 36 HK cents per share.

– Contact us at [email protected]

MY/JP/CG

EJ Insight reporter

EJI Weekly Newsletter

Please click here to unsubscribe