(Yicai Global) April 14 -- Kunlun Tech's shares dropped after the Chinese mobile gaming and social entertainment platform operator said its artificial intelligence products and AI-generated content models have not contributed to revenue as yet.

Kunlun Tech [SHE: 300418] ended 2.7 percent down at CNY48.75 (USD7.12) a share today, after swinging between a gain of as much as 6 percent and a loss of 5.6 percent. The broader Shenzhen market added 0.5 percent. Kunlun Tech’s stock has surged 238 percent so far this year.

The company’s AI business will likely contribute little to Beijing-based Kunlun Tech’s earnings this year, it said in reply to an inquiry from the Shenzhen Stock Exchange yesterday.

Its response to the Shenzhen exchange differs from what Kunlun Tech told investors on the bourse’s interactive platform in February. At that time, the company said its AI-generated music model had launched in mid-2022, it had partnered with firms in the music, education, auto, and gaming sectors, and had generated some income.

Kunlun Tech has contravened the exchange’s rules because it did not disclose its AI business' actual situation, its impact on the firm's performance, and related risks in an objective and complete manner when responding to investors’ enquiries, as ChatGPT and similar products have garnered much attention, the bourse said in a regulatory letter. 

Kunlun Tech's dual 100 billion-parameter large language model, Tiangong 3.5, which is to compete with OpenAI's ChatGPT, may face risks, including slow research and development progress, less-than-expected application practice and commercialization, intensified industry rivalry, and policy changes, the firm added yesterday.

Established in 2008, Kunlun Tech integrates the R&D of self-developed games, global distribution of premium games and platforms, and has an app store. Its net profit fell 25.5 percent to CNY1.2 billion (USD175.3 million) in the 12 months ended Dec. 31 from the year before. The firm's net profit, excluding investment returns, jumped 112 percent to CNY640 million (USD93.5 million), while revenue fell 2.3 percent to CNY4.7 billion. 

Editors: Shi Yi, Martin Kadiev