*Marine Harvest Group (MNHVF), the Norwegian salmon producer, reported nearly doubling its operational before tax earnings to euros 149 mn in Q2. It has switched to reporting in euros. It also declared a NOK 3.20/sh dividend, boosted by proceeds from divesting Grieg Seafood at NOK 1.1/sh. Sales rose 9% to Euros 832 mn boosted by higher prices while volumes were down. MHG also predicted that full year volumes will hit 400,000 metric tonnes, vs an earlier estimate of 414,000. The price of Norwegian salmon lost nearly 45% y/y and Scottish salmon prices also fell while that for other areas of the world like Canada rose substantially. MHG (and others) sold Chilean salmon at a loss because of lice infestation. Overall, despite high salmon prices, the firm said “farming costs have become unacceptably high and the cost trend is not satisfactory.” It added: “compared to 2015 costs are up in all regions” and it will need “the utmost focus on cost reduction and new methods and innovative solutions” to cut them. It did not release EPS figures, perhaps because they are too depressing.

We sold half our MHG. Sell the other half at $15.55, for a gain. The idea of farming the sea appeals to those aiming to improve world food supplies, but the profits are proving elusive despite or perhaps because MHG dominates the field with a presence in 24 countries.

*The Financial Times headline: “Watch out Facebook, Tencent is following you” is one view of the results at TCTZF. This refers to the Chinese firm testing ads on its messaging app, WeChat.

But the truly significant news in its quarterly result was from its gaming side, responsible both for its new investments and its beating forecasts in its Q1 (to June 30.) Tencent net profits hit RMB 10.7 bn in the quarter, $1.6 bn, vs the average analyst estimate of RMB 9.5 bn. This was a remarkable rise of 47% year/year. In the quarter Tencent bought Finnish Supercell (maker of Clash of Clans) for $8.6 bn.

Gaming generated gains came from revenues up 52% to RMB 35.7 bn. Of the total, RMB 9.6 bn came from sales of smartphone games, up 115% y/y. Total online gaming sales rose by nearly a third to RMB 17.1 bn. The main source of the boosted sales is not (yet) ads, but add-ons, sold to gaming enthusiasts for real money: faster plays, better swords, snazzy monickers. Never underestimate the stupidity of Chinese teen-age boys.

The ads on WeChat did not yet kick in but with over 800 mn subscribers, up over 34% from last year, the social media forum is clearly tempting to ad-buyers. There are two schools of thought in examining Tencent. Some people look for the Asian copy-cat effect. In my opinion. Tencent is not so much copying Western internet systems as innovating for China.

What is still to be determined is whether it can sell back to foreign countries versions of the gaming and social media apps which earn it huge gains in China. The jury is still out.