Hong Weekly Author | Liang Xing
Recently, the CPPCC held a special consultative conference to further encourage the expansion and strengthening of the digital economy. The internet industry is currently witnessing 'two major turning points,' namely regulatory certainty and the turning point of the pandemic. Currently, the regulatory environment encouraging the healthy development of the platform economy has been established. Subsequently, as the pandemic gradually subsides, the sector is expected to return to its previous growth trajectory.
Policy bottom emerging
Short-term financial results under pressure but long-term outlook positive
Due to the impact of the international situation and repeated outbreaks in various regions, this year's macroeconomic growth rate is under pressure. As an important part of online consumption, internet platforms are also one of the key drivers for stabilizing economic growth throughout the year. In recent years, domestic internet regulation has tightened, including anti-monopoly measures, content supervision, and information security oversight, which have exerted some pressure on the short-term development of the industry.
However, since the beginning of this year, the turning point of internet policy has gradually become evident, with high-level meetings sending continuous signals of marginal improvement in the attitude towards rectification of the platform economy. Under the gradual warming of regulatory signals, the valuation recovery opportunities of previously oversold internet companies deserve attention.
Recently, internet companies have successively disclosed their Q1 financial reports. Overall, most companies are experiencing significant operating pressure amid complex policy and economic environments. For example, Tencent achieved total operating revenue of 135.471 billion yuan, flat compared to the same period last year, but its adjusted net profit was 25.545 billion yuan, a year-on-year decrease of 23%. The weaker-than-expected performance is mainly due to slower commercialization of businesses such as gaming and finance under regulatory and pandemic pressures, weakening advertising demand amid economic cycles, and increased investments amid intensifying competition.
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