(Yicai Global) March 23 -- Tencent Holdings’ share price surged after the Chinese internet behemoth said profit rose in the final quarter of last year thanks to cost-cutting efforts, though annual profit fell.

Tencent [HKG: 0700] closed up 8.2 percent at HKD375.60 (USD47.85) a share today, bringing the stock’s gain so far this year to 18.3 percent.

Net profit jumped 12 percent to CNY106.3 billion (USD15.6 billion) in the three months ended Dec. 31 from a year earlier, accounting for more than 56 percent of last year’s total, the Shenzhen-based firm’s trading report showed yesterday. Revenue rose 1 percent to CNY145 billion.

Tencent started to make savings, including through staff redundancies and business adjustments, in the second half of last year in response to a challenging environment. Cost-cutting and greater efficiency will remain the gaming and social networking firm’s priority, founder and Chief Executive Pony Ma said on a conference call after the earnings came out.

For the full year, net profit sank 16 percent to CNY188.2 billion from the year prior, while revenue fell for the first time, dropping 1 percent to CNY554.6 billion.

Tencent's business-to-business performed well in 2022, as revenue from the financial technology and business services segment surpassed that from games for the first time, contributing CNY177 billion or 32 percent of the total.

Business growth has normalized after the latest strategic adjustments, President Martin Lau said on the same call. “We're now in the right time for pursuing higher growth, especially for the second half of 2023,” he noted.

Tencent invested CNY61.4 billion (USD9 billion) in research and development in 2022, to exceed CNY205.6 billion in the five years from 2018. The company said it will continue to seek high growth and develop the short video and artificial intelligence big model businesses in the future.

Video Accounts, a service that helps businesses secure more traffic for brands to open shops, was among Tencent's top focuses last year. Its fourth-quarter revenue exceeded CNY1 billion (USD146.6 billion). Tencent will expand Video Accounts' commercial opportunities to enhance the development of short videos and livestreams, Lau said.

Tencent has a long-standing experience in developing and adopting AI technologies, Lau said, adding that it had been using AI in internal businesses to enhance efficiency. Tencent is mostly laying the foundations before further optimizing its Hunyuan Aide big model, which takes a long time to build, he noted.

Editors: Shi Yi, Futura Costaglione