Tencent dives despite confirmation on China antistrust flowout

(Bloomberg) – Tencent Holdings Limited has said that the potential improvement in its 120 120 billion fintech wing should have a small impact on its business, citing the impact of Beijing’s ighten probe on China’s largest internet companies. Its shares sank the most in two months.

President Martin Lau acknowledged meeting founder Pony Mane recently met with regulators but said it was voluntary and part of a series of regular meetings. Officials reiterated that the company always adheres to cautious and fintech rules and will stick to the general practice of getting minority stakes in Chinese startups, while regulators focused on past deals.

Beijing is cracking down on the country’s largest corporations, fearing their growing chaos after years of relatively uncontrolled expansion. With regulators reportedly considering forcing the closure of its promising fintech division in a similar fashion to Jack Manny Ant Group this month, President Xi Jinping warned that they would go after “platform” companies that collect data and market power. Internet crackdown is not limited to Ant and its backer Alibaba Group Holdings Limited.

Shares of Tencent traded higher in Hong Kong on Thursday. is the biggest intraday fall in two months, the worst since January, when sales of Asia’s largest company topped billion 1 billion. Technolog shares also fell following the U.S. route, as regulators revived threats to sue China’s largest corporations compared to American buyers.

Read more: China Tech Giants Join Danger of Crackdown as Delisting Threat

Bernstein analyst Robin Xu wrote in a research note that many of the questions on Tencent’s quarterly call were directed at regulatory risks, and it is difficult to argue against the idea that it could be a major influence on Tencent’s share price performance. . But the fourth quarter “Numbers serve as a reminder that the business is in very strong shape.”

Lau acknowledged that companies like Tencent draw a fine line between public duty and profit motives as they get older, but the “boring answer” was to stay consistent and stay in touch with the government. Asked whether Tencent’s main gaming and entertainment businesses could attract the attention of antitrust regulators, officials pointed to the sheer number of competitors. That was the opposite a quarter ago, when they emphasized the new no-confidence rules, which focused more on transaction-based platforms than Tencent’s entertainment businesses.

“We have always been very focused on compliance and we will continue to work strictly in compliance with the rules and regulations,” Lai told reporters at a conference. Any requirements to form a financial holding company will not affect its business, he added. “Compliance is our lifeline.”

READ MORE: Impact of Revamp in Financial Holding Payment Tencent Waves

Tencent’s attempt to allay investors ’concerns over regulatory scrutiny shows revenue growth that barely meets expectations.

On Wednesday, top officials repeatedly stressed that they would make every effort to comply with the regulations. Tencent, which has held stakes in hundreds of startups over the years, is going over past investments to ensure they meet the requirements of the no-confidence motion. Used by more than a billion people, Vechter’s Porter has vowed to protect user privacy again, as it recognizes the need to consider Beijing’s call to share data on everything from search to e-commerce.

The government, led by People’s Bank of China, has proposed to set up a joint venture with tech giants to monitor the lucrative data they collect, showing a significant increase in regulators’ efforts to tighten their grip on the sector. .

“Tencent is trying to reassure investors that there are significant differences from ants in its microloan business,” said Michael Norris, research manager at Shanghai-based consultancy agency China. “While Tencent can avoid the same level of scrutiny of the Ant Group, there could be some difficulties along the way. Potential issues may include data collection verification or regulatory attention to the promotion and cross-selling of financial products. ”

Read more: China has been called a state-backed company on overseas tech data

Sales for the three months ended December rose 26% to 133.7 billion yuan (.5 20.5 billion), compared to an average forecast of 133.1 billion yuan. Net income.3.3..3 billion yuan, with one-time profit contributing half of its profits. Which is compared to an estimated 32.9 billion yuan.

It is not clear how far Beijing wants to call for a curb on Tencent and its allies. Soon, investors will probably focus more on how the world’s largest game publisher can sustain an epidemic-driven entertainment boom, in order to get more in-depth enjoyment in new industries like advertising and payments. Despite an increase in sales of titles such as Peacekeeper Elite and the newly launched Moonlight Blade Mobile – games online games revenue rose 29% in the fourth quarter – the slowest pace in almost a year.

All rely on WeChet, the avenue through which Tencent reaches out to users and products in the markets, including its or male Kings f Kings and the biggest gaming hits like PUBG Mobile. Championed by the mini-program model, WeChet planned a 0 240 billion transaction for 400 million daily users last year. It now relies on a new short-video feed within the All-Purpose platform to stop Bytecens Ltd. from keeping an eye out with ticket cousin China cousin Duin.

Tencent’s earnings may resist engine scrutiny: Tim Kalpan

The social network’s sales rose 27 percent after Tencent’s consolidated contribution from Hua Inc. Advertising Online advertising revenue has increased by 22%.

Fintech and Businesses – the division that oversees Tencent’s various money operations as well as the cloud – has increased revenue by 29% thanks to payment and asset management services. But concerns remain over whether the company can sustain that momentum.

China’s largest company faces further scrutiny of its fintech operations as regulators step up oversight of a weak but sprawling industry that could bring systemic risks. As one of the region’s largest tors operators, Tencent’s businesses face similarly drastic measures that have negated the broken growth of ants.

The proposed rules to break market concentrations in digital payments and rein rein on consumer financing would hurt Tencent’s vet pay and its wider fintech business prospects. Bloomberg reported this month that regulators are considering asking the company to fold its fintech operations into a holding entity that could regulate more like a bank.

What Bloomberg Intelligence Says

The company is tiptoeing through a potentially hazardous hair-trigger regulatory landscape, as Tencent’s spread focus on risk management threatens to grind its development gears.

– Wei-Cern Ling and Tiffany Tam, analysts

Click here for research

Read more: Tinsant says to face Broad China clampdown on fintech, deals

(Updates with analyst comment in paragraph 5)

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