![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/08\/Tencent.png\")
<\/a><\/p>\nTencent\u2019s projected 37 percent growth in revenue would be its slowest since 2015. Chief among analysts\u2019 concerns is the hold-up in launching PUBG on desktops and still-absent approval to start earning off Chinese players of the mobile version — the country\u2019s second most popular game in June by time spent.<\/p>\n
The litany of headaches coincides with Beijing\u2019s harshest internet content crackdown in history.<\/p>\n
All that\u2019s hobbling its chief source of income. Deutsche Bank analysts led by Han Joon Kim now forecast a 6% drop in mobile gaming revenue in the second quarter from the first, rather than a rise of the same magnitude.<\/p>\n
\u201cTencent\u2019s share price may continue to decline without new drivers as the growth of the mobile gaming industry is expected to slow down,\u201d said Rick Su, a Taipei-based fund manager at Capital Investment Trust Corp.<\/p>\n
He trimmed his holding to 2.7 percent of his portfolio from 5.2 percent in February, according to Bloomberg data. \u201cIf that\u2019s the case, it can\u2019t sustain the high valuations of a growth stock.\u201d<\/p>\n
Still, the gaming giant could emerge from the doldrums in the third quarter if it finally gets the green light to unveil PC versions of PUBG and Fortnite, the Battle Royale-meets-Minecraft game that\u2019s taken the world by storm. \u201cWe expect online games sales growth to pick up in the second half,\u201d CCB International analyst Ronnie Ho wrote.<\/p>\n
Alibaba, in contrast, is expected to post its fastest growth in revenue since December 2013, a 61% jump. Heavy investments into traditional retail, video content and new services such as food delivery helped bolster growth. Advertising and commission revenue at the e-commerce giant might have grown 31 percent, according to Barclays\u2019 Zhao.<\/p>\n
Those expenditures are eating into margins. In the span of two years, Alibaba has acquired control of its logistics network, video streaming business Youku and now food delivery services Ele.me. It\u2019s pouring money into an array of groceries and department stores such as Hema.<\/p>\n
Margins on earnings before interest, tax, depreciation and amortization for Alibaba\u2019s core e-commerce business could\u2019ve dived 17 percentage points from last year to 46%, according to Shi Jialong, an analyst with Nomura.<\/p>\n
That spending however may be vital for the longer term. \u201cInvestment is essential for Alibaba to tap into a much bigger addressable market beyond its current 13% China retail market share,\u201d Karen Chan, an analyst with Jefferies Hong Kong Ltd, said in a report.<\/p>\n
As for Tencent, investors are looking for any signs of a turnaround. Asked for a prediction on how shares would react after earnings, China Galaxy\u2019s Po struck a pessimistic note.<\/p>\n
\u201cIt depends on how bad the news is,\u201d he said.<\/p>\n