Chinese mainland technology companies listed in the Hong Kong Special Administrative Region have posted strong financial results for last year, reaping the benefits of favorable government policies, technological progress and strategic overseas expansion.

The firms said they plan to ramp up investments in research and development, particularly in artificial intelligence (AI), to sustain their growth trajectories.

Internet and technology giant Tencent Holdings announced on Wednesday that after benefiting from AI-powered advertising and growth in gaming business, it achieved revenue of 660.26 billion yuan ($91.35 billion) for 2024, an 8-percent increase from the previous year. Profit attributable to equity holders surged by 68 percent to 194.07 billion yuan.

The board has proposed a final dividend of HK$4.5 ($0.58) per share for 2024, a 32 percent increase compared with 2023.

Consumer electronics and smart manufacturing giant Xiaomi Corp said on Tuesday its total revenue for 2024 soared to 365.9 billion yuan ($50.62 billion) -- a record high, representing a 35-percent year-on-year increase.

READ MORE: China's Xiaomi unveils first EV, plans to become top automaker

Income from the company’s “Smartphone × AIoT” segment reached 333.2 billion yuan -- up 22.9 percent from 2023. Revenue from overseas markets stood at 153.3 billion yuan, accounting for nearly 42 percent of total earnings.

Adjusted net profit for 2024 also hit a historic high at 27.2 billion yuan -- a 41.3-percent gain on a yearly basis -- despite a loss of 6.2 billion yuan from new businesses, including the production of smart electric vehicles (EVs). Since launching its first electric car -- Xiaomi SU7 -- in March last year, the company had delivered nearly 137,000 units by yearend.

XPeng -- another key player in the smart electric vehicle sector -- reported total revenue of 40.87 billion yuan for 2024, marking a 33.2-percent increase from the previous year. Vehicle sales generated 35.83 billion yuan, up 27.9 percent year-on-year.

The company’s gross margin improved from 1.5 percent in 2023 to 14.3 percent, with automotive margins bouncing back from a negative 1.6 percent to 8.3 percent, driven by higher sales and progress in technology-driven cost reductions.

Alvin Ngan, an equity strategist at Zhongtai Financial International, said  factors like “policy-driven innovation, competitive AI solutions, and strategic global expansion” will continue to solidify the leadership of Chinese tech firms on the world stage.

In the new energy vehicle market, he said besides increased subsidies and financial incentives, technological breakthroughs have enhanced battery energy density and charging efficiency, along with the expansion of charging infrastructure, which contributed to the accelerated growth of China’s new energy vehicle sector in 2024.

Tom Chan Pak-lam, a director at the Institute of Securities Dealers in Hong Kong, said the central government’s policies to stimulate domestic demand have also helped NEV sales.

Executives from these firms said they’re committed to increasing investments in R&D, especially in AI, to leverage technological breakthroughs to make themselves more competitive and improve business growth.

Tencent reported an investment of 70.69 billion yuan in R&D last year. The company revealed that it restructured its AI team to “sharpen focus on both fast product innovation and deep model research, increased our AI-related capital expenditures, and increased our R&D and marketing efforts for our AI-native products”.

READ MORE: Xiaomi says it will invest more in EVs; auto plan seen on track

Lu Weibing, partner and president of Xiaomi, said the company plans to invest 30 billion yuan in R&D this year, about a quarter of which is expected to be allocated to AI research. In 2024, R&D cost Xiaomi 24.1 billion yuan -- a 25.9-percent increase year-on-year.

XPeng co-founder and executive director He Xiaopeng announced plans to establish R&D centers outside the mainland this year to attract talent and focus on international technological development.

Looking ahead, Chan said the central government’s continuing support for technological innovation and domestic consumption will “steer key market players in the right direction”.

However, both Chan and Ngan said tariffs from Western countries could hinder export growth. Intensified competition and mounting pressure on profitability can also pose challenges for tech firms this year, Ngan added.

Despite these headwinds, Ngan said he remains optimistic, expecting “Chinese tech stocks to keep outperforming market benchmarks”. The valuations of Chinese tech firms are lower than those of their US peers even as earnings have bottomed out. With foreign investors now underweight in Chinese tech stocks, Ngan said they will buy more in the coming months.

Contact the writer at irisli@chinadailyhk.com