Kunlun Tech Co.,Ltd. has unveiled two major moves: planning a H-share listing on the Hong Kong Stock Exchange and selling a 99% stake in its subsidiary Xianlai Interactive Entertainment for 7.5 billion yuan. These steps underscore the company's pivot toward artificial intelligence, as it seeks to shed its gaming identity and shore up cash for AI investments.

The disposal of Xianlai, a leader in regional Chinese chess and card games, comes at a time when Kunlun Tech is refocusing on AGI and AIGC. The buyer, Xinglan Interactive Entertainment, will pay the sum in installments, with the first tranche of 3.75 billion yuan due by September 2026. Including unpaid dividends, Kunlun Tech expects to recover about 9.46 billion yuan from the deal.

Xianlai generated 3.16 billion yuan in revenue and 7220 million yuan in net profit in 2025, but Kunlun Tech cited strategic misalignment with its AI ambitions as the reason for the sale. The company's founder, Zhou Yahui, has a history of pivoting to hot sectors, from gaming to Opera's browser business, which now contributes over half of Kunlun Tech's revenue.

Kunlun Tech has posted losses for two consecutive years, totaling 3.6 billion yuan, as it ramps up AI spending. In 2025, revenue grew 44.78% to 81.98 billion yuan, but the net loss widened to 15.93 billion yuan. The company spent 16.76 billion yuan on R&D and 41.82 billion yuan on sales and marketing, the latter driven by user acquisition for AI short-form video and music platforms.

Analysts warn that heavy reliance on marketing spend signals weak competitive moats, while the AI story remains unproven. The company's first-quarter 2026 loss expanded to 8.87 billion yuan from 7.69 billion yuan a year earlier. Despite these challenges, Kunlun Tech is betting on AI applications like short-form video and music, aiming to build an "AI-powered Netflix."

The sale of Xianlai and other non-core assets, such as Beijing Lyu Fan New Energy, is part of a broader strategy to streamline operations and support the Hong Kong listing. However, experts caution that the buyer's small size and the deferred payment schedule pose collection risks, and the long-term viability of Kunlun Tech's AI push remains uncertain without stable cash flow from gaming.