Taipei — Tencent may not be a superhero after all. Revenue at the Chinese social media company — in which JSE-listed Naspers has a 33% stake — missed estimates by the largest margin in more than three years, user growth slowed and margins are under pressure. It’s about to get worse. Masking these troubles in the company’s fourth-quarter numbers was a sevenfold increase in "net other gains", a catchall category that included gains from the initial public offerings (IPOs) of companies it has backed such as Sea, Sogou and Yixin Group, as well as tax rebates, subsidies and dividends from investments. Tencent folds all these items into operating income, which is how it managed to post net income that beat estimates and boost its operating margin by seven points — all despite the fact that its gross margin dropped 6.4 percentage points to the lowest in at least a decade. By stripping out the entire "other gains" category — which I think should be reported under nonoperating items anyway —...

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