Tencent Music Entertainment Group Class A (HK:1698)
:1698
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Tencent Music Entertainment Group Class A
(1698)
Select Model
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Rating:73Outperform
Price Target:
HK$71.00
▲(100.00% Upside)
Action:ReiteratedDate:11/27/25
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
Low leverage / strong balance sheet
Extremely low leverage and a high equity ratio provide durable financial flexibility, lowering refinancing and interest risk. This balance sheet strength supports long-term investments in content licensing, product development, and strategic M&A without materially increasing financial strain.
Negative Factors
Slowing revenue growth trend
A deceleration in revenue growth signals potential market saturation or tougher competitive dynamics in core streaming and social monetization. Without new scalable revenue streams or material share gains, slower top-line expansion can constrain long-term investment capacity and returns.
Read all positive and negative factors
Positive Factors
Negative Factors
Low leverage / strong balance sheet
Extremely low leverage and a high equity ratio provide durable financial flexibility, lowering refinancing and interest risk. This balance sheet strength supports long-term investments in content licensing, product development, and strategic M&A without materially increasing financial strain.
Read all positive factors
Tencent Music Entertainment Group Class A (1698) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$100.01B
Dividend Yield1.01%
Average Volume (3M)950.24K
Price to Earnings (P/E)17.6
Beta (1Y)1.25
Revenue Growth13.62%
EPS Growth80.52%
CountryHK
Employees5,353
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.80
Shares Outstanding1,432,859,700
10 Day Avg. Volume903,442
30 Day Avg. Volume950,242
Financial Highlights & Ratios
PEG Ratio0.54
Price to Book (P/B)1.89
Price to Sales (P/S)4.52
P/FCF Ratio13.88
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
HK$65.47Price Target Upside84.42% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
EPS Forecast (FY)3.47
Revenue Forecast (FY)HK$41.02B
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 ...
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 re...
Tencent Music Entertainment Group Class A Earnings Call Summary
Earnings Call Date:Mar 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 18, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive financial and operational picture: solid top-line growth (Q4 +15%, FY +16%), stronger gross margins (+1.1–1.9pp YoY), expanding non-subscription monetization (Q4 +41% in non-subscription music services) and successful scaling of SVIP (20M+). Material achievements in IP monetization — live events, merchandise and original content — and broad AI/product adoption further underpin growth. Notable negatives include a high Q4 effective tax rate (70.5%), a Q4 decline in social entertainment (-5% YoY), one-off gains that boosted full-year net profit, management’s warning of short-term subscription pressure from competition and AI-related risks to original content and royalties. On balance the positives (revenue, margin expansion, diversified monetization and strong cash/dividend) outweigh the challenges, though some execution and regulatory/AI risks remain.Positive Updates
Strong Revenue Growth (Q4 and FY2025)
Total revenues for Q4 2025 grew 15% YoY to RMB 8.6 billion; full-year 2025 total revenues rose 16% YoY to RMB 32.9 billion, driven by subscription, advertising and IP-related monetization.
Negative Updates
Pressure on Subscription Growth Outlook
Management flagged that subscription revenue may face short-term pressure in 2026 due to intensified competition despite the multi-tier membership strategy.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Revenue Growth (Q4 and FY2025)
Total revenues for Q4 2025 grew 15% YoY to RMB 8.6 billion; full-year 2025 total revenues rose 16% YoY to RMB 32.9 billion, driven by subscription, advertising and IP-related monetization.
Read all positive updates
Company Guidance
TME's guidance for 2026 emphasizes continued investment in content and technology while expecting 2026 gross profit to be roughly flat or slightly below 2025 (2025 full‑year gross margin 44.2%; Q4 44.7%), with total net profit projected to improve but margins broadly similar to—or modestly lower than—2025. Management warned of short‑term pressure on subscription revenue from competition but pointed to expansion in non‑subscription channels (advertising, live performances, merchandise) as growth drivers after 2025 results of RMB32.9bn total revenue (+16% YoY), RMB26.7bn online music services (+23% YoY), RMB17.7bn music subscription (+16% YoY), Q4 revenue RMB8.6bn (+15%), Q4 subscription RMB4.6bn (+13%) and Q4 non‑subscription RMB2.5bn (+41%); SVIP users have surpassed 20 million and an ad‑supported tier is being piloted. Operational changes include ceasing certain quarterly operating metric disclosures (reporting total paying users annually at year‑end); liquidity was RMB38.0bn in cash and equivalents as of Dec 31, 2025; the board declared a USD0.24 per ADS dividend (~USD368m) payable Q2 2026. The company also highlighted AI adoption—its AI music production platform has 10m+ users and 150k+ professional creators—and reiterated an ROI‑focused approach to marketing and IP monetization to execute the 2026 plan.Tencent Music Entertainment Group Class A Financial Statement Overview
Summary
Income Statement
85
Very Positive
Balance Sheet
78
Positive
Cash Flow
82
Very Positive
| 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
Negative
35.50
Price Trends
53.86
Negative
62.02
Negative
73.93
Negative
Market Momentum
-5.65
Positive
22.89
Positive
3.10
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1698, the sentiment is Negative. The current price of 35.5 is below the 20-day moving average (MA) of 44.24, below the 50-day MA of 53.86, and below the 200-day MA of 73.93, indicating a bearish trend. The MACD of -5.65 indicates Positive momentum. The RSI at 22.89 is Positive, neither overbought nor oversold. The STOCH value of 3.10 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:1698.
Tencent Music Entertainment Group Class A Risk Analysis
Tencent Music Entertainment Group Class A disclosed 101 risk factors in its most recent earnings report. Tencent Music Entertainment Group Class A reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Tencent Music Entertainment Group Class A Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | HK$196.06B | 13.56 | 25.44% | ― | 11.37% | 16.74% | |
73 Outperform | HK$100.01B | 17.65 | 13.77% | 1.01% | 13.62% | 80.52% | |
67 Neutral | HK$26.35B | -39.92 | -4.08% | ― | -10.26% | -85.75% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
60 Neutral | HK$16.62B | 5.39 | 12.13% | 8.13% | -1.40% | 22.37% | |
53 Neutral | HK$287.08B | 59.14 | 2.02% | ― | -2.92% | -57.12% | |
47 Neutral | HK$6.86B | 13.03 | 6.13% | 4.71% | -7.61% | -90.51% |
* Communication Services Sector Average
HK:1698
Tencent Music Entertainment Group Class A
35.50
-14.21
-28.58%
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Tencent Music Entertainment Group Class A Corporate Events
Tencent Music Reports Strong Q3 2025 Financial Results
Nov 12, 2025
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 ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.