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Two Positive Signs From TENCENT (00700.HK)’s 2021 Annual Report

On 14 March 2022, the China technology giant Tencent (00700.HK) announced it’s annual results for the year ended 31 December 2021. There two positive signs from the report.

Revenues and Earning Growth

2021 is a tough year for China technology company. Under the crackdown from the government, Big Tech companies are under pressure to reform their business models and growth are expected to slow down.

From 2021 annual result, Tencent still maintain a growth of 16% in revenue, from RMB 482,046 million in 2020 to RMB 560,118 million in 2021. Earning per share increase from 16.8%, from RMB 16.844 in 2020 to RMB 23.597 in 2021.

Transition of the Business Model

Tencent ‘s revenue once mainly from its gaming sector of its business model. By the growth of new business unit and diversification. Tencent’s revenue structure has been changed.

From 2021 annual report, Value-added Services (Included domestic games and international games segment) only increased by 10%, from RMB 264,212 million in 2020 to RMB 291,572 million in 2021. This segment represent 52% of total revenue in 2021 which decreased from 55% in 2020.

On the other hand, FinTech and Business Services increased by 34%, from RMB 128,086 million in 2020 to RMB 172,195 million in 2021. This segment represent 31% of total revenue in 2021 which increased from 27% in 2020. It seems this sector will be the main growth factor in future.

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