Tencent Music Entertainment Group Class A (HK:1698)
:1698
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Tencent Music Entertainment Group Class A
(1698)
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Rating:72Outperform
Price Target:
HK$38.00
▲(10.98% Upside)
Action:Reiterated
Date:04/21/26
The score is driven primarily by strong financial performance (improving margins, rising earnings, and low leverage). This is partially offset by weak technicals (price below key moving averages and negative MACD). Valuation is reasonable with a moderate P/E and dividend support, while the latest earnings call was positive overall but tempered by 2026 margin pressure and competitive risks.
Positive Factors
Improved Profitability
Sustained margin expansion materially strengthens earnings power and cash generation, making core economics more resilient to top-line volatility. Higher gross and net margins provide durable buffers for content investment, dividend returns and reinvestment into product, supporting long‑term profitability.
Negative Factors
Subscription Growth Pressure
Subscriptions are a central recurring revenue driver; sustained competitive pressure can slow net adds and ARPU, forcing higher marketing or promotional spend. Prolonged subscriber weakness would reduce revenue predictability, compress margins and require heavier investment to defend market share over multiple quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Improved Profitability
Sustained margin expansion materially strengthens earnings power and cash generation, making core economics more resilient to top-line volatility. Higher gross and net margins provide durable buffers for content investment, dividend returns and reinvestment into product, supporting long‑term profitability.
Read all positive factors
Tencent Music Entertainment Group Class A (1698) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$103.28B
Dividend Yield1.01%
Average Volume (3M)950.24K
Price to Earnings (P/E)12.2
Beta (1Y)1.23
Revenue Growth17.42%
EPS Growth-3.31%
CountryHK
Employees5,353
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)3.59
Shares Outstanding1,482,859,700
10 Day Avg. Volume903,442
30 Day Avg. Volume950,242
Financial Highlights & Ratios
PEG Ratio0.28
Price to Book (P/B)2.37
Price to Sales (P/S)5.93
P/FCF Ratio19.25
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
HK$55.67Price Target Upside62.60% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)3.5
Revenue Forecast (FY)HK$41.06B
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
TME primarily makes money through a mix of (1) online music services and (2) social entertainment services. Online music services generate revenue mainly from paid subscriptions that provide users with premium listening benefits and access to lice...
Tencent Music Entertainment Group Class A Earnings Call Summary
Earnings Call Date:Mar 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 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
86
Very Positive
Balance Sheet
90
Very Positive
Cash Flow
78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 32.05B | 28.40B | 27.75B | 28.34B | 31.24B |
| Gross Profit | 18.27B | 12.03B | 9.79B | 8.77B | 9.40B |
| EBITDA | 13.16B | 9.81B | 7.17B | 5.65B | 4.75B |
| Net Income | 10.77B | 6.64B | 4.92B | 3.68B | 3.03B |
Balance Sheet | |||||
| Total Assets | 102.57B | 90.44B | 75.54B | 67.01B | 67.25B |
| Cash, Cash Equivalents and Short-Term Investments | 24.34B | 27.21B | 23.54B | 20.88B | 20.43B |
| Total Debt | 3.81B | 6.05B | 6.05B | 5.96B | 5.36B |
| Total Liabilities | 19.48B | 20.72B | 18.33B | 17.88B | 16.20B |
| Stockholders Equity | 80.32B | 67.86B | 55.91B | 48.10B | 50.32B |
Cash Flow | |||||
| Free Cash Flow | 9.88B | 9.24B | 6.17B | 6.43B | 2.48B |
| Operating Cash Flow | 10.17B | 10.28B | 7.34B | 7.48B | 5.24B |
| Investing Cash Flow | -10.28B | -6.82B | -1.86B | -1.45B | -6.00B |
| Financing Cash Flow | -4.41B | -3.83B | -1.54B | -3.42B | -3.71B |
Tencent Music Entertainment Group Class A Technical Analysis
Negative
34.24
Price Trends
39.79
Negative
51.34
Negative
68.05
Negative
Market Momentum
-1.35
Negative
44.34
Neutral
46.93
Neutral
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 34.24 is below the 20-day moving average (MA) of 36.10, below the 50-day MA of 39.79, and below the 200-day MA of 68.05, indicating a bearish trend. The MACD of -1.35 indicates Negative momentum. The RSI at 44.34 is Neutral, neither overbought nor oversold. The STOCH value of 46.93 is Neutral, 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 1 New Risks
1.
The AI industry faces changing and extensive regulations. Integrating AI into our offerings could lead to potential infringement claims and higher costs for regulatory compliance. Q4, 2023
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 |
|---|---|---|---|---|---|---|---|
72 Outperform | HK$103.28B | 12.16 | 13.77% | 1.01% | 17.42% | -3.31% | |
72 Outperform | HK$6.51B | 12.72 | 6.13% | 4.71% | 13.41% | 210.17% | |
68 Neutral | HK$208.08B | 13.58 | 25.63% | ― | 12.62% | 22.16% | |
65 Neutral | HK$15.80B | -128.76 | 12.13% | 8.13% | 0.06% | 48.33% | |
61 Neutral | HK$1.92B | 7.67 | 6.72% | 4.08% | -25.20% | 33.72% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
49 Neutral | HK$748.09M | -67.86 | -2.11% | 4.48% | 277.10% | -143.33% |
* Communication Services Sector Average
HK:1698
Tencent Music Entertainment Group Class A
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Tencent Music Entertainment Group Class A Corporate Events
Tencent Music Completes Acquisition of Ximalaya to Expand Audio Empire
May 18, 2026
Tencent Music Entertainment Group has completed its acquisition of Ximalaya Inc., a major audio platform, making it a wholly owned subsidiary and significantly deepening its presence in the online audio market. The deal, structured as a merger, in...
Tencent Music Posts Solid Q1 2026 Growth on Expanding Music Services
May 12, 2026
Tencent Music Entertainment Group, the leading online music and audio entertainment platform in China, derives most of its business from music-related services, particularly membership-based access to music and audio content and associated digital...
Tencent Music Sets Record Date for 2026 AGM Voting Eligibility
May 6, 2026
Tencent Music Entertainment Group has set May 20, 2026, as the record date for holders of its Class A and Class B ordinary shares to determine eligibility to attend and vote at its upcoming annual general meeting of shareholders. Share transfer do...
Tencent Music Files Form 6-K Ahead of First-Quarter 2026 Earnings Date
Apr 14, 2026
Tencent Music Entertainment Group has notified investors that it has filed a Form 6-K with the U.S. Securities and Exchange Commission to announce the date of its first-quarter 2026 earnings release. The disclosure, made in line with Hong Kong lis...
Tencent Music Reports Strong Q4 2025 Growth on Surging Online Music Revenue
Mar 17, 2026
Tencent Music Entertainment Group reported strong unaudited financial results for the fourth quarter and full year 2025, highlighting double-digit growth across its core businesses. Total revenue for the quarter rose 15.9% year over year to RMB8.6...
Tencent Music Declares 2025 Annual Cash Dividend of USD 0.12 per Share
Mar 17, 2026
Tencent Music Entertainment Group has declared an ordinary annual cash dividend of USD 0.12 per share for the financial year ended December 31, 2025, payable in U.S. dollars. The ex-dividend date is set for April 1, 2026, with a record date of Apr...
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.