Chinese internet giant Tencent posts lowest annual profit since 2019

Core Viewpoint - Tencent reported its lowest annual profit since 2019, with a total net profit of 115.2 billion yuan ($16.0 billion) for 2023, despite a slight recovery in China's economy and a more lenient regulatory environment [1][2]. Financial Performance - Tencent's total revenue for 2023 reached 609.0 billion yuan ($84.6 billion), marking a 10 percent increase year-on-year [2]. - The company plans to increase its share repurchase scheme to over HKD100 billion ($12.8 billion) in 2024, more than doubling the previous year's amount [2]. Regulatory Environment - The Chinese government has relaxed its regulatory approach towards the tech sector, which had been under strict oversight since 2020 [2]. - New game approvals remain a significant hurdle, with the issuance of licenses frozen for nine months in 2021, and the approval process has not returned to previous efficiency levels [3]. AI Development - Tencent is focusing on artificial intelligence (AI), launching Hunyuan, an AI-powered chatbot aimed at competing with ChatGPT [4]. - Hunyuan is recognized as a top-tier foundation model, excelling in numerical reasoning, logical inference, and multi-turn conversations [4]. - Despite the AI push, gaming continues to be Tencent's most critical business segment [4][5]. Strategic Moves - Tencent is looking to strengthen its position in the gaming sector by acquiring stakes in emerging studios, particularly in Europe [5]. - The company is cautious about large investments in AI, potentially lagging behind first movers in the sector by one to two years [5].