Tencent is back in the game in China.
After a nine-month freeze that hammered Tencent (TCEHY)’s stock price, Chinese authorities have started allowing the internet company to make money off new mobile games again.
China’s State Administration of Press and Publications began issuing new game licenses late last month, wading into an estimated backlog of more than 7,000 titles that had built up during the epic halt on approvals.
But the first three lists of approved titles featured none from Tencent, the world’s largest gaming company. Its break came with the announcement Thursday of the latest batch of licenses, which included two of its games.
Investors welcomed the news, pushing Tencent shares up 4.1% in Hong Kong on Friday. The stock has lost about 25% of its value in the past year.
The company is still waiting for licenses for some of its most popular mobile games. Those approvals, rather than the ones announced Thursday, will make the real difference for its earnings.
Jefferies analyst Karen Chan said in a research note that she expects Tencent’s revenue growth from mobile games to accelerate in the second quarter as it gets permission to launch more and more titles.
NetEase (NTES), another leading Chinese gaming company, also received its first new approval for one title on Thursday.
The Chinese government stopped approving licenses that allow companies to make money from new mobile games last March. Since the freeze was lifted in late December, regulators have approved fewer than 400 new games, leaving thousands more in limbo.
The freeze came amid an increasingly restrictive environment for China’s gaming industry. In August, the Education Ministry announced plans for new rules to control the number of games and limiting the time children spend playing them.
Tencent was hit hard by the crackdown. Gaming accounts for more than 40% of the company’s revenue. Last year, the regulatory pressures contributed to a rare quarterly profit decline and helped wipe billions off its market value.
Tencent is still waiting for approval for some of its most highly anticipated mobile games like “PlayerUnknown’s Battlegrounds.”
Titles like that were probably left off the first few batches of licenses because they “are more sophisticated in design and therefore have to go through a longer review period,” Tony Cheung, an analyst with stock broker CFSG in Hong Kong, wrote in a note to clients this week.
China is the world’s largest gaming market, accounting for a quarter of global revenue, according to market research firm Newzoo. It expected China’s total gaming revenue to reach $38 billion in 2018.