Tencent Music Entertainment Group Class A (1698) AI Stock Analysis

• Market Cap: HK$252.99B
• Dividend Yield: 0.96%
• Average Volume (3M): 950.24K
• Price to Earnings (P/E): 25.0
• Beta (1Y): 1.15
• Revenue Growth: 13.62%
• EPS Growth: 80.52%
• Country: HK
• Employees: 5,353
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 0.75
• Shares Outstanding: 1,432,859,700
• 10 Day Avg. Volume: 903,442
• 30 Day Avg. Volume: 950,242
• PEG Ratio: 0.54
• Price to Book (P/B): 1.89
• Price to Sales (P/S): 4.52
• P/FCF Ratio: 13.88
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$100.52
• Price Target Upside: 37.32% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 20
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: HK$80.00 ▲(9.29% Upside)

Tencent Music Entertainment Group's strong financial performance and positive earnings call sentiment are the primary drivers of its stock score. However, technical analysis indicates bearish momentum, which tempers the overall score. The stock's valuation is reasonable, providing a balanced outlook.

Positive Factors

Revenue Growth

The significant revenue growth indicates strong market demand and effective business strategies, enhancing long-term financial stability.

Music Subscription Growth

The substantial increase in music subscription revenues highlights the company's ability to attract and retain paying users, ensuring steady cash flow.

Strong Balance Sheet

A strong balance sheet with low leverage provides financial flexibility and resilience, supporting long-term growth and investment opportunities.

Negative Factors

Declining Free Cash Flow

Decreasing free cash flow growth could limit the company's ability to invest in new projects and respond to market changes, affecting future growth.

Challenges in Social Entertainment

The decline in social entertainment revenues suggests difficulties in this segment, potentially impacting overall revenue diversification and growth.

Lower Margins in New Areas

Lower margins in new business areas may affect profitability, requiring strategic adjustments to maintain overall margin stability.

Tencent Music Entertainment Group Class A Business Overview & Revenue Model

Company Description

Tencent Music Entertainment Group Class A (1698) is a leading online music entertainment platform in China, operating through its subsidiaries. The company primarily focuses on music streaming services, social entertainment, and content distribution. Its core products include popular music streaming applications such as QQ Music, Kugou, and Kuwo, which offer a wide range of music content, social features, and live streaming services. Tencent Music also engages in the licensing of music content and artist management, making it a prominent player in the digital music landscape.

How the Company Makes Money

Tencent Music generates revenue through several key streams. The primary source is subscription services, where users pay for premium memberships to access ad-free music, offline listening, and exclusive content. Additionally, the company earns revenue from advertising on its free-tier services, which attracts a large user base. Another significant revenue stream comes from the licensing of music rights to other platforms and the sale of digital albums and songs. Tencent Music also monetizes live streaming events and social features, including virtual gifts and in-app purchases. Partnerships with major music labels and artists enhance its content library and distribution capabilities, further driving its revenue growth.

Tencent Music Entertainment Group Class A Financial Statement Overview

Summary

Tencent Music Entertainment Group demonstrates strong profitability and a solid financial position, with robust margins and low leverage. However, the slowing revenue growth and declining free cash flow growth present potential challenges. The company is well-positioned financially, but maintaining growth momentum will be crucial for sustaining its strong performance.

Income Statement

Tencent Music Entertainment Group shows strong profitability with a TTM gross profit margin of 43.72% and a net profit margin of 33.83%. The company has demonstrated consistent revenue growth, with a 4.42% increase in the TTM period. EBIT and EBITDA margins are robust at 41.28%, indicating efficient operational management. However, the revenue growth rate has slowed compared to previous years, suggesting potential challenges in maintaining growth momentum.

Balance Sheet

The balance sheet is solid with a low debt-to-equity ratio of 0.072, reflecting conservative leverage. Return on equity is healthy at 14.20%, indicating effective use of shareholder funds. The equity ratio stands at 77.76%, showcasing a strong equity base. While the company maintains a stable financial position, the relatively low debt levels suggest limited leverage for growth opportunities.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth by 13.34% in the TTM period, which could impact future investments. The operating cash flow to net income ratio is 0.53, indicating moderate cash generation efficiency. The free cash flow to net income ratio is high at 0.96, suggesting strong cash conversion. Despite the decline in free cash flow growth, the company maintains a solid cash flow position.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	31.72B	28.40B	27.75B	28.34B	31.24B	29.15B
Gross Profit	13.93B	12.03B	9.79B	8.77B	9.40B	9.30B
EBITDA	13.01B	9.81B	7.17B	5.65B	4.75B	5.55B
Net Income	10.81B	6.64B	4.92B	3.68B	3.03B	4.16B
Balance Sheet
Total Assets	104.87B	90.44B	75.54B	67.01B	67.25B	68.27B
Cash, Cash Equivalents and Short-Term Investments	22.32B	27.21B	23.54B	20.88B	20.43B	26.02B
Total Debt	3.87B	6.05B	6.05B	5.96B	5.36B	5.50B
Total Liabilities	19.43B	20.72B	18.33B	17.88B	16.20B	15.54B
Stockholders Equity	82.75B	67.86B	55.91B	48.10B	50.32B	52.24B
Cash Flow
Free Cash Flow	10.00B	9.24B	6.17B	6.43B	2.48B	4.38B
Operating Cash Flow	10.32B	10.28B	7.34B	7.48B	5.24B	4.88B
Investing Cash Flow	-3.77B	-6.82B	-1.86B	-1.45B	-6.00B	-14.21B
Financing Cash Flow	-5.45B	-3.83B	-1.54B	-3.42B	-3.71B	5.29B

Tencent Music Entertainment Group Class A Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 73.20
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1698, the sentiment is Neutral. The current price of 73.2 is below the 20-day moving average (MA) of 73.62, below the 50-day MA of 82.76, and below the 200-day MA of 74.55, indicating a bearish trend. The MACD of -3.36 indicates Negative momentum. The RSI at 39.88 is Neutral, neither overbought nor oversold. The STOCH value of 75.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HK:1698.

Tencent Music Entertainment Group Class A Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1698	73 Outperform	HK$252.99B	24.97	14.50%	0.96%	13.62%	80.52%
1024	71 Outperform	HK$291.72B	15.39	25.67%	―	11.37%	16.74%
9888	63 Neutral	HK$335.25B	11.49	3.02%	―	-3.52%	-60.93%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
9898	60 Neutral	HK$20.59B	7.67	12.49%	7.88%	-1.40%	22.37%
0772	52 Neutral	$43.27B	300.00	0.67%	―	-10.26%	-85.75%
1896	49 Neutral	HK$8.16B	99.43	0.82%	4.51%	-7.61%	-90.51%

Tencent Music Entertainment Group Class A Corporate Events

Tencent Music Reports Strong Q3 2025 Financial Results

Tencent Music Entertainment Group announced a strong financial performance for the third quarter of 2025, with total revenues reaching RMB8.46 billion, marking a 20.6% year-over-year increase. The growth was driven by a 27.2% rise in online music services revenues and a 17.2% increase in music subscription revenues. The company’s net profit attributable to equity holders grew by 36.0% year-over-year, demonstrating robust financial health. TME’s strategic focus on content enrichment and service expansion, particularly in live experiences, has bolstered its subscription revenue growth and strengthened its position in the music industry.

Tencent Music Sets Date for Q3 2025 Earnings Release

Tencent Music Entertainment Group announced the date for its third quarter 2025 earnings release, which was submitted to the U.S. Securities and Exchange Commission via a Form 6-K. This announcement is part of the company’s regulatory compliance with the Hong Kong Stock Exchange, where it is also listed. The release of the earnings date is an important event for stakeholders as it provides insights into the company’s financial performance and strategic direction.

Tencent Music to Announce Q3 2025 Results on November 12

Tencent Music Entertainment Group announced that its board of directors will review and vote on the company’s unaudited third-quarter results for the period ending September 30, 2025. The results will be published on November 12, 2025, after the Hong Kong market closes and before the U.S. market opens, potentially impacting stakeholders’ expectations and market positioning.