Tencent ups buybacks to $100b after profits dive

Tencent (0700) plans to hike its share buybacks to over HK$100 billion this year, though its net profit plunged in 2023 partly due to softening video game demand in the mainland.

The Chinese tech giant repurchased 152 million shares for HK$49 billion last year to stem the decline of its stock prices, in addition to 34 million shares in January.

It also raised the final dividend by 42 percent to HK$3.4 apiece.

President Martin Lau Chi-ping said the company's value is significantly underestimated and it has US$24 billion (HK$187 billion) of free cash flow for continuous returns to shareholders.

Commenting on an earlier consultation by China's gaming regulator on new gaming rules, Lau said the impact would be limited even if they are rolled out.

The proposed rules - aimed at curbing spending and rewards that encourage playing video games- triggered a panic sale of related stocks at the end of December but were later deleted from the National Press and Publication Administration's website.

Net profit fell 39 percent to 115 billion yuan (HK$125 billion) last year from a high base in 2022, after gains from the disposal of its stake in Meituan (3690).

Full-year revenue grew 10 percent to 609 billion yuan. However, the fourth-quarter net profit plunged 75 percent to 27 billion yuan and revenue only increased 7 percent to 155.2 billion yuan, slightly below market estimates.

In the last quarter, revenue from domestic games retreated 3 percent to 27 billion yuan on the fewer contributions from Honour of Kings and Peacekeeper Elite, its two flagship products, while that from international games only inched up 1 percent to 13.9 billion yuan.

While Lau expects a "moderate" performance in this quarter on the high base one year ago, he believes the video game revenue will recover in the second quarter with more new game launches.