Tencent reported Q4 financial results after the Hong Kong close.
Tencent reported Q4 financial results after the Hong Kong close.2021 was described as a “challenging year” while the industry is going through an evolution, having focused on “zero-sum competition, aggressive marketing, reckless expansion, short-term growth, and corporate benefits, overlooking the most important elements of sustainable growth.”. Advertising revenue was weak driven by the regulation of industries such as private tutoring/education and the macroeconomy. Management expects this to improve in 2022. The company expects game releases in 2022 will pick up, though the company lacks clarity on timing from the regulator. Another factor is Tencent’s investment in private companies as “valuations have become more volatile” which is a bit of an understatement! Returning capital to shareholders is a priority through the JD.com spin-off this Friday, stock buyback, and dividends. The company is working with financial regulators to set up a financial holding company for its fintech unit. The company said it expects this to be a positive move. One analyst asked if Tencent should break itself into multiple companies to avoid regulation. Martin Lau dismissed the idea as I suspect that analyst’s questions won’t be taken in the future! Tencent is a very well company with a strong management team.
