(Yicai) May 24 -- NetEase, one of China's biggest mobile video game makers, said its net profit rose 11.8 percent in the first quarter, mainly thanks to a surge in income from its online gaming business.

Net profit was CNY7.6 billion (USD1.1 billion) in the three months ended March 31, the Hangzhou-based company said in an earnings report yesterday. Its operating revenue rose 7.2 percent to CNY26.9 billion (USD3.7 billion) from a year earlier.

NetEase's net revenue from games and related value-added services rose 7 percent to CNY21.5 billion, with income from the online game business accounting for 95 percent, it noted. The firm's gaming business is growing faster than that of its main rival Tencent Holdings, whose relevant operating income fell 0.4 percent to CNY48.1 billion.

The main reason for the growth in NetEase's games and related VAS is increasing net income from popular mobile games such as Eggy Party and some new games, according to the company. Many mobile games achieved record high revenue in the first quarter, it noted.

Fantasy Westward Journey hit a record-high income in the first three months, while Identity V did the same in revenue and daily active users this month on its sixth anniversary. Infinite Borders posted a three-year high in revenue in the first quarter during its ninth anniversary.

NetEase's earnings in the first quarter met expectations, according to research agency Dolphin Research. More impressive was that its revenue from mobile games surpassed expectations with a rising gross margin.

Shares of NetEase [HKG: 9999] rose 0.4 percent to HKD142.10 (USD18.19) apiece as of 2.25 p.m. in Hong Kong today, after jumping by as much as 4.5 percent in the morning trading session. In New York yesterday, its stock [NASDAQ: NTES] fell 3.7 percent to end at USD94.74.

Editor: Martin Kadiev