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

• Market Cap: HK$278.49B
• Dividend Yield: N/A
• Average Volume (3M): 1.14M
• Price to Earnings (P/E): 27.5
• Beta (1Y): 1.08
• Revenue Growth: 10.25%
• EPS Growth: 84.17%
• Country: HK
• Employees: 5,353
• Sector: Communication Services
• Sector Strength: 94
• Industry: Internet Content & Information
• EPS (TTM): 0.85
• Shares Outstanding: 1,432,859,700
• 10 Day Avg. Volume: 1,355,104
• 30 Day Avg. Volume: 1,139,524
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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$109.22
• Price Target Upside: 11.11% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 78 Outperform
• Price Target: HK$115.00 ▲(16.99% Upside)

Tencent Music Entertainment Group's strong financial performance and positive earnings call are the primary drivers of its stock score. The company's robust revenue growth and strategic initiatives contribute significantly to its positive outlook. However, the high valuation and overbought technical indicators suggest caution.

Tencent Music Entertainment Group Class A Business Overview & Revenue Model

Company Description

Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover and listen to music in personalized ways; and WeSing, which enables users to have fun by singing and interacting with friends, sharing their singing performances with friends, and discovering songs that others have sung. The company also operates Kugou Music, Kuwo Music, WeSing, QQ Music, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with those interested in their performance; and Kuwo Changting, an audio platform that offers users various audio content, including audio books, cross-talks, radio dramas, and other entertainment. In addition, it sells music-related merchandise, including Kugou headsets, smart speakers, WeSing karaoke microphones, and Hi-Fi systems; and offers online music event ticketing services, as well as services to smart device and automobile makers to build and operate music services on devices and vehicles. Tencent Music Entertainment Group has a strategic partnership with China Literature. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.

How the Company Makes Money

Tencent Music Entertainment Group generates revenue primarily through its four main business segments: online music services, social entertainment services, advertising, and other services. The online music services segment earns money through subscription fees from users who opt for premium services that offer higher audio quality and exclusive content. The social entertainment services segment is a significant revenue driver, generating income through virtual gifts purchased by users during live streaming and karaoke sessions. Advertising on Tencent Music's platforms also contributes to its revenue, as businesses pay to reach the large audience using these services. The company's strategic partnerships with major record labels and artists also enhance its content offerings and attract more users to its platforms.

Tencent Music Entertainment Group Class A Financial Statement Overview

Summary

Tencent Music Entertainment Group demonstrates strong financial health and operational efficiency. The company has achieved notable profitability improvements, maintained a robust balance sheet, and efficiently managed cash flows, indicating a stable and growing financial outlook.

Income Statement

Tencent Music Entertainment Group has shown strong growth in profitability, with gross and net profit margins improving significantly. The TTM gross profit margin stands at 43.11% and net profit margin at 32.81%. Over the past year, the company achieved a revenue growth rate of 2.07%, indicating stable expansion. The EBIT and EBITDA margins also reflect robust operational efficiency at 39.97% and 40.54%, respectively.

Balance Sheet

The company maintains a strong financial position with a low debt-to-equity ratio of 0.08, indicating minimal leverage. The equity ratio is solid at 74.67%, showcasing a strong equity base. Return on equity has improved to 12.99% in the TTM, reflecting enhanced shareholder returns. The balance sheet demonstrates stability, although the equity ratio trend suggests a need for cautious leverage management.

Cash Flow

Cash flow analysis reveals a strong conversion of operating cash flow to net income with a ratio of 1.06, indicating efficient cash generation relative to profits. The free cash flow growth rate is slightly negative at -1.81%, yet the free cash flow to net income ratio remains healthy at 0.95, suggesting good cash flow management despite minor fluctuations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	28.99B	28.40B	27.75B	28.34B	31.24B	29.15B
Gross Profit	12.50B	12.03B	9.79B	8.77B	9.40B	9.30B
EBITDA	11.75B	9.81B	7.17B	5.65B	4.75B	5.55B
Net Income	9.51B	6.64B	4.92B	3.68B	3.03B	4.16B
Balance Sheet
Total Assets	98.08B	90.44B	75.54B	67.01B	67.25B	68.27B
Cash, Cash Equivalents and Short-Term Investments	26.69B	27.21B	23.54B	20.88B	20.43B	26.02B
Total Debt	6.08B	6.05B	6.05B	5.96B	5.36B	5.50B
Total Liabilities	22.89B	20.72B	18.33B	17.88B	16.20B	15.54B
Stockholders Equity	73.24B	67.86B	55.91B	48.10B	50.32B	52.24B
Cash Flow
Free Cash Flow	9.08B	9.24B	6.17B	6.43B	2.48B	4.38B
Operating Cash Flow	10.11B	10.28B	7.34B	7.48B	5.24B	4.88B
Investing Cash Flow	-4.54B	-6.82B	-1.86B	-1.45B	-6.00B	-14.21B
Financing Cash Flow	-3.76B	-3.83B	-1.54B	-3.42B	-3.71B	5.29B

Tencent Music Entertainment Group Class A Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 98.30
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 98.3 is above the 20-day moving average (MA) of 89.98, above the 50-day MA of 82.62, and above the 200-day MA of 58.56, indicating a bullish trend. The MACD of 5.11 indicates Negative momentum. The RSI at 64.68 is Neutral, neither overbought nor oversold. The STOCH value of 69.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	78 Outperform	HK$278.49B	27.48	13.99%	―	10.25%	84.17%
Sector *	60 Neutral	$42.44B	3.87	-13.01%	4.03%	1.90%	-42.25%
CHLLF	―	$5.63B	180.66	0.67%	―	―	―
1024	79 Outperform	HK$320.44B	18.83	25.22%	―	10.72%	17.05%
9888	73 Outperform	HK$238.41B	8.07	10.28%	―	-1.69%	42.04%
9898	71 Outperform	HK$21.72B	8.09	10.70%	7.16%	0.99%	14.41%
1896	56 Neutral	HK$9.43B	47.59	2.01%	3.91%	-15.71%	-80.38%

Tencent Music Entertainment Group Class A Corporate Events

Tencent Music to Announce Q2 2025 Financial Results

Tencent Music Entertainment Group has announced that its board of directors will review and vote on the company’s unaudited financial results for the second quarter of 2025 on August 11, 2025. The results will be published on August 12, 2025, after the Hong Kong market closes and before the U.S. market opens, potentially impacting investor decisions and market positioning.

Tencent Music Sets Date for Q2 2025 Earnings Release

Tencent Music Entertainment Group announced the date for its second quarter 2025 earnings release, which was filed with the U.S. Securities and Exchange Commission. This announcement is part of the company’s regulatory compliance and provides stakeholders with a timeline for when they can expect detailed financial performance information, which could impact investor decisions and market perceptions.

Tencent Music Announces Upcoming Annual General Meeting

Tencent Music Entertainment Group has announced its forthcoming annual general meeting, as detailed in a current report filed with the U.S. Securities and Exchange Commission. This announcement is part of the company’s regulatory compliance and includes information about the meeting’s notice, proxy forms, and voting cards for ADS holders, reflecting its commitment to maintaining transparent communication with its stakeholders.

Tencent Music Entertainment Group Announces 2025 Annual General Meeting

Tencent Music Entertainment Group has announced its Annual General Meeting (AGM) scheduled for June 27, 2025, in Hong Kong. The meeting will address key resolutions including the re-appointment of PricewaterhouseCoopers as the company’s auditor for 2025 and the re-election of Mr. Wai Yip Tsang as a director. Shareholders and American Depositary Shares (ADS) holders as of May 20, 2025, are entitled to vote on these resolutions. This AGM is crucial for maintaining the company’s governance and ensuring continued compliance with financial auditing standards.