* Q1 net income is largest-ever quarterly profit
* Profit up 60 pct to 6.46 bln yuan vs. est. 4.94 bln yuan
* Revenue, profit margins highest in 3 years
* Seeks to cash in on growth of WeChat messaging service (Recasts, adds analyst comment)
By Paul Carsten
BEIJING, May 14 Tencent Holdings Ltd, China's biggest listed tech firm, is ratcheting up its profits on smartphones as it transplants its strength in social networking and gaming onto mobile. Now it aims to repeat that for new business ventures.
At the moment, Shenzhen-based Tencent makes most of its money from the division which includes its video gaming business and sales of digital goods.
But Tencent has already spent more than $1.2 billion in areas like e-commerce, real estate and digital mapping since the beginning of 2014, as it looks to develop mobile messaging app WeChat - Weixin in Chinese - as a gateway for all users' needs on a smartphone.
Worth over $120 billion by market value, Tencent is China's largest listed tech firm and has become the biggest potential rival to Alibaba Group Holding, the Chinese e-commerce giant readying itself for a blockbuster U.S. listing.
"On Weixin they have an extremely strong presence on mobile and among consumers - they've taken care of their short game very well but if you look at the long game it looks great as well," said Michael Clendenin, managing director of Shanghai-based RedTech Advisors.
"If investors have to wait two or three years for mobile commerce to take off that's fine, because in the meantime social and gaming revenues are a pretty nice bridge to that," he said.
Tencent's many investments include a March tie up with JD.com Inc, ranked a distant second behind Alibaba in China online retail and now heading for its own New York listing which could raise as much as $1.7 billion.
Many of its new investments are in mobile commerce, like hailing a taxi with an app or a service to find and book the nearest restaurant or cinema seats.
Tencent's previous efforts at e-commerce didn't fare well against competition from the likes of Alibaba, which has an iron grip on online shopping in China with an almost 80 percent market share. When Tencent invested in JD.com it divested control of its e-commerce assets to the Alibaba rival.
That may be changing, as Tencent capitalises on WeChat's reach.
"Tencent has lots of ambition on mobile commerce," said Wang Xiaofeng, a Beijing-based tech analyst with Forrester.
"I do think it has great market potential here because consumers and marketers want to use the WeChat platform to do mobile commerce," Wang said.
Tencent said on Wednesday its net income soared 60 percent to 6.46 billion yuan ($1.04 billion) in the three months ended March from 4.04 billion yuan a year earlier, its largest-ever quarterly profit and the fastest growth in three years. Analysts had forecast profit of 4.93 billion yuan.
WeChat global monthly active user numbers rose 11.5 percent to just 396 million, and video games, with total revenue for smart phone games tripling to over 1.8 billion yuan from the previous quarter.
"Our online games business achieved a healthy year-on-year increase in revenues, with growth across PC client games and mobile games," Tencent said in its earnings filing to the Hong Kong Exchange.
Revenue growth was also the fastest in three years, leaping to 18.4 billion yuan in the quarter from 13.5 billion yuan a year earlier. Global monthly active users of WeChat grew 11.5 percent from the previous quarter to 396 million.
The division that includes the lucrative gaming business saw a 35 percent jump in revenue, boosted by success in sales of games for smartphones distributed over hugely popular mobile messaging app WeChat.
In April, it agreed to add King Digital Entertainment's 'Candy Crush Saga', a mobile game known for being highly addictive, to the stable of WeChat games.
The earnings may also allay concern among some analysts that Tencent's profit margins might be shrinking. The surge in net income helped deliver the best margins since the first quarter of 2011.
The numbers were released after Tencent shares closed up 1.3 percent in Hong Kong trading on Wednesday, versus a 1.0 percent rise in the Hang Seng Index.
($1 = 6.2291 Chinese Yuan) (Reporting by Paul Carsten; Editing by Kenneth Maxwell and Susan Thomas)