Profits at Tencent Music Entertainment, China’s largest online music group, dropped in a year of regulatory turmoil and market evolution.

Revenues at the company managed a 7% year on year increase, reaching RMB31.2 billion ($4.90 billion) from RMB29.15 billion in the same period of 2020, the company said in a filing on Tuesday. Net profit attributable to equity holders in 2021 was RMB3.03 billion ($475 million), down 28% compared to net profit of RMB4.16 billion in 2020.

The company also reported figures for the three months from October to December, showing revenues of RMB7.61 billion ($1.19 billion), a decrease of 8.7% year-on-year. Quarterly net profits reduced by more than half to RMB536 million ($84 million), compared to RMB1.20 billion in the final quarter 2020. It was the third quarter in a row in which profits declined.

Despite the drop in profitability, the company said that it will seek a secondary listing of its shares on the Hong Kong Stock Exchange without raising additional capital. The company is controlled by Chinese tech giant Tencent, but currently has its shares listed in ADR form on the New York Stock Exchange.

The company said that the secondary listing would provide greater liquidity to shareholders. It would also be a defensive move in case the U.S. authorities force Chinese companies to delist from the NYSE and NASDAQ markets, as has been mooted. The company described the secondary listing as offering “protection amid an evolving regulatory environment.” The website of the Hong Kong Stock Exchange does not currently show a listing prospectus for the company.

Tencent Music was hit mid-2021 by Chinese regulators who stripped the company of its exclusive supply contracts with big music labels and ended its ability to gouge sub-licensees.

In response, Tencent Music said that it was changing its business mix to downplay music licensing, play up social entertainment (i.e. karaoke) and expand other revenue streams, such as original music production, live concerts and long-form audio.

The financial data published in the filing appear to suggest that the opposite is occurring. Revenues from music subscriptions were up 32% to RMB7.33 billion ($1.15 billion), compared to RMB5.56 billion for the full year of 2020. It enjoyed a 39% increase in the number of paying users, but these generated a lower revenue per user of RMB8.9 per year (down from RMB9.4 per year in 2020).

Revenues from social entertainment services and others for the full year of 2021 were unchanged at RMB19.8 billion ($3.10 billion). The company pointed to the negative impact of increased competition from other pan-entertainment platforms and a changing macro-economic environment, which were mitigated by strong revenue growth in audio live streaming.

The reduced overall profit margin appears largely to have been a result of a hefty RMB1.11 billion ($174 million) increase in operating costs and a nearly RMB2 billion ($313 million) increase in the cost of revenues, which was attributed to investments in new products such as the Tencent Musician Platform.

“In the future, we will focus on optimizing our cost structure and improving operating efficiency across our businesses while continuing to drive innovation, better user experiences and healthy industry development,” said Cussion Pang, executive chairman of TME. “We will continuously expand content production, licensing, operation, promotion, and monetization efforts to augment the scale and fortify the quality and competitiveness of our music catalog.”

Tencent is expected to report its 2021 annual financials on Wednesday.