Traders work at the Stock Exchange in Hong Kong yesterday. Hong Kong share prices closed 3.04 percent lower yesterday, matching falls in regional markets on worries about economic data out of the United States. AFP

HONG KONG: Shares in Tencent Holdings Ltd, operator of the mainland's largest online instant messaging (IM) service, jumped nearly 10 percent in Hong Kong trading yesterday after the company posted better-than-expected first quarter earnings Wednesday.

Shares in the Shenzhen-based company ended 9.8 percent higher at HK$79.95 after reaching HK$82. By contrast, the benchmark Hang Seng Index dropped 3 percent, or 517.93 points, to 16,541.69.

Net earnings in Tencent soared 95 percent to 1.04 billion yuan in the first three months of the year. The figures were given a strong assist by an upsurge in the number of online-game players, the company said in a filing to the Hong Kong stock exchange late Wednesday. The result exceeded analysts' estimates of earnings of approximately 823 million yuan. Sales also rose 75 percent to 2.5 billion yuan, according to the company's statement.

Tencent, the best-performing stock on Hong Kong's benchmark Hang Seng Index in the past year, is stepping up game development to focus on the more than 400 million people who use its IM service known as QQ.

Ma Huateng, chairman of Tencent, said the company relies on titles including "Dungeon & Fighter" and "Cross Fire" to boost sales as the global recession continues to slice into Internet advertising revenue.

"The outlook for the online-game business is strong for the next few years, as there are some new games in the pipeline," said Frank He, at BOC International in Hong Kong, said. He rates Tencent shares "buy." "The company has a very large subscriber base of QQ users to market the games."

Sales of Internet value-added services, including online games and QQ-related subscription fees, rose to 1.9 billion yuan from 998.7 million yuan, Tencent said. Online advertising sales climbed to 146.6 million yuan from 144.6 million yuan.

The company had 410.8 million active QQ-messenger accounts at the end of March, compared with 376.6 million three months earlier, it said.

The China Enterprises Index, a measure tracking Hong Kong-listed mainland companies, fell 3 percent to 9,448.53.

Retail sales in the US decreased 0.4 percent in April, the US Commerce Department reported Wednesday. Analysts said the data dampened confidence in a recovery in the world's largest economy while shrinking turnover on the exchange battered shares.

Hong Kong Exchanges & Clearing Ltd, operator of Asia's third-largest stock market, lost 7.1 percent to HK$102 after the firm's chairman said it is hard to say if the company's earnings have hit bottom.

Foxconn International Holdings Ltd, the world's biggest contract maker of mobile phones, retreated 5.05 percent while HSBC Holdings, which made 24 percent of its 2008 sales in North America, slid 4.2 percent.

(HK Edition 05/15/2009 page6)