(Yicai Global) Nov. 11 -- Shares of Tencent Holdings fell after China’s biggest company by market cap reported its slowest revenue growth since going public in 2004 amid tighter regulation at home.

The gaming and social media giant’s stock price [HKG:0700] finished 1.2 percent lower at HKD477.60 (USD61.30). Earlier today the shares slid as much as 3.4 percent. The benchmark Hang Seng Index gained 1 percent.

Revenue rose 13 percent to CNY142.4 billion (USD22.3 billion) in the three months ended Sept. 30 from a year earlier, the Shenzhen-based company’s latest earnings report showed yesterday. That was slower than the second quarter’s 20 percent clip.

China introduced new rules in August to curb the amount of time and money underage players spend on video games, while it has not approved any new game titles since that month. Macroeconomic developments and a tighter regulatory regime also impacted key advertising sectors such as education and insurance.

“Stricter regulation is a new normal for the entire industry, and that's not just for China but also globally,” President Martin Law said on an earnings conference call after the financial statement was released.

Net profit beat the market consensus of CNY32.6 billion (USD5.1 billion), rising 3 percent to CNY39.5 billion.

Income from online advertising rose 5 percent to CNY22.5 billion as resilience in advertiser categories such as consumer staples and internet services offset lower spending by the education, insurance and gaming sectors.

Users under the age of 18 accounted for 0.7 percent of the total hours spent gaming in China in September, down from 6.4 percent a year earlier, according to Tencent. They accounted for 1.1 percent of Tencent’s domestic games’ gross receipts that month, down from 4.8 percent.

‘Profit Squeeze’

J.P. Morgan Chase said in a research report published today that slowing revenue growth and higher investment spending will further squeeze Tencent's profits. The firm’s share price may be impacted by China’s Personal Information Protection Law that took effect from Nov. 1, changes in gaming regulations, and the growth momentum of financial and business services, it said.

Revenue from value-added service businesses including online games jumped 8 percent to CNY75.2 billion in the third quarter from the same period last year. Domestic games revenue rose 5 percent to CNY33.6 billion, while overseas income was CNY11.3 billion, up 20 percent.

Meanwhile, the cost of revenue soared 16 percent to CNY79.6 billion in the period, reflecting increases in transaction costs, payment-related transaction volumes, server and bandwidth, cloud project development, and content costs, Tencent said.

In the third quarter, the company earned CNY43.3 billion from fintech and business services, up 30 percent, buoyed by increased payment volume growth.

The combined monthly active users on the firm’s social media platforms WeChat and QQ reached 1.3 billion as of Sept. 30, up 4.1 percent from the same time last year. Despite QQ's mobile MAUs falling 7.1 percent to 574 million, fee-based value-added services subscriptions rose 10.3 percent to 235 million.

Editor: Futura Costaglione