Chinese tech company Tencent Holdings announced a 175% year on year increase in fourth quarter profits Wednesday, up from market estimates as financial regulators clamp down on monopolistic behavior among the country’s largest conglomerates.
Tencent reported 59.3 billion yuan ($9.1 billion) in profit over the last quarter of 2020, more than twice the 21.6 billion yuan racked in over the same period the year before and handily beating consensus estimates.
“We extended our leading position in the consumer internet space with enriched content and innovations across our products, while making notable progress in international expansion, starting with games,” founder and CEO Pony Ma said.
The numbers look good, but the bulk of that profit in the fourth quarter is from one time gains that provided a temporary boost to mediocre sales growth in the three months ending December 2020.
Over the year, total profit increased 71% to 159.8 billion yua, nearly 30 billion yuan higher than predicted, while revenue in 2020 rose 28% to 482.1 billion yuan.
Ahead of the earnings announcement, Tencent’s Hong Kong-listed stock price fell 0.8% and closed at HK$623.50 ($80.26).
Founded in 1998 by Pony Ma, Tencent operates the largest video game business in the world while its WeChat app is home to the second largest mobile payment service in China behind Alibaba’s Alipay.
Ma is a likely next target for financial authorities. Alibaba founder Jack Ma was targeted late last year through a series of investigations that derailed the Ant Group IPO, and earlier this month Tencent was one of 12 large tech businesses fined by the State Administration for Market Regulations (SAMR).
The company’s dance with regulators continues, as two Tencent-backed video game streaming apps try to move forward with a merger that would consolidate 90% of Chinese users onto one platform. The deal has come under close scrutiny from SAMR.
Elsewhere in the Chinese tech ecosystem, phone maker Xiaomi share prices jumped more than 4.0% to reach HK$27.35 earlier this week after CEO and founder Lei Jun announced “big news” in a post on blogging website Weibo Sunday.
The company will hold a product launch event on March 29 and Chinese social media has been rife with predictions about potential merchandise set to be unveiled, including a line of electric vehicles.
Xiaomi has been “paying attention to the developments in the electric vehicle industry,” a filing last month said.
