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Tencent Music Entertainment Group Class A (HK:1698)
:1698
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Tencent Music Entertainment Group Class A
(1698)
Select Model
Select Model
Rating:76Outperform
Price Target:
HK$110.00
▲(21.75% Upside)
Tencent Music Entertainment Group's strong financial performance and positive earnings call are the most significant factors driving the stock score. The company's robust profitability and strategic initiatives support a positive outlook. However, the high valuation and slowing revenue growth present potential risks. Technical indicators suggest stable momentum, but the valuation limits upside potential.
Tencent Music Entertainment Group Class A (1698) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$259.89B
Dividend YieldN/A
Average Volume (3M)1.00M
Price to Earnings (P/E)25.6
Beta (1Y)1.16
Revenue Growth10.25%
EPS Growth84.17%
CountryHK
Employees5,353
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.85
Shares Outstanding1,432,859,700
10 Day Avg. Volume1,242,441
30 Day Avg. Volume1,002,750
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$107.78Price Target Upside19.29% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Tencent Music Entertainment Group Class A Business Overview & Revenue Model
Company DescriptionTencent 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 MoneyTencent 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 Earnings Call Summary
Earnings Call Date:Aug 12, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 18, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance with record revenue growth, increased online music revenue, and successful product and feature launches driving SVIP adoption. Despite a decline in social entertainment revenue and some impact on gross margins from offline events, the overall outlook remains positive with continued investment in innovative offerings.Q2-2025 Updates
Positive Updates
Record Revenue Growth
Total revenue reached a record high of RMB 8.4 billion, up by 18% year-over-year, driven by strong growth in new subscription and advertising services.
Online Music Revenue Surge
Online music revenues grew 26% year-on-year to RMB 6.9 billion, supported by an expansion in subscriber base and ARPPU.
SVIP Subscriber Milestone
SVIP subscribers exceeded 15 million, reflecting deep trust and loyalty within the user community.
Innovative Product Launches
Introduction of new features like high-quality sound and AI chorus function, enhancing user experiences and driving SVIP adoption.
Strong Advertising Growth
Advertising revenue continued strong growth both year-on-year and quarter-on-quarter, aided by innovative ad formats and successful product optimization.
Successful Offline Events
Hosted over 300 offline shows for nearly 100,000 musicians, and successful large-scale events like G-Dragon's concert in Macau.
Bubble Community Launch
Launched the interactive community Bubble on QQ Music, enabling direct engagement with K-pop artists and planning to include Chinese artists.
Negative Updates
Social Entertainment Revenue Decline
Social entertainment services and other revenues were RMB 1.6 billion, down by 9% year-on-year due to adjustments in live streaming and compliance procedures.
Gross Margin Impact from Offline Events
Despite revenue growth, offline performances and artist merchandise with lower gross margins offset some of the overall gross margin increase.
Regulatory Approval Pending
The deal with Himalaya is awaiting regulatory approval, which limits immediate synergies and strategic benefits.
Company Guidance
During the Tencent Music Entertainment Group's second quarter 2025 earnings call, management highlighted solid financial performance with total revenue reaching a record RMB 8.4 billion, marking an 18% year-over-year increase. Online music revenue grew 26% year-over-year to RMB 6.9 billion, while net profit increased by 38% to RMB 2.5 billion. The company's SVIP subscribers exceeded 15 million, reflecting strong user engagement. Advertising revenue continued to grow robustly, driven by innovative ad formats and increased user engagement. The call also discussed strategic initiatives, such as expanding music-related services, hosting large-scale concerts, and enhancing user experiences through new interactive features. Additionally, long-term prospects include diversifying revenue streams and sustaining growth through operational efficiencies and strategic partnerships.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.85
Very Positive
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.78
Positive
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.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 30.27B | 28.40B | 27.75B | 28.34B | 31.24B | 29.15B |
| Gross Profit | 13.23B | 12.03B | 9.79B | 8.77B | 9.40B | 9.30B |
| EBITDA | 12.50B | 9.81B | 7.17B | 5.65B | 4.75B | 5.55B |
| Net Income | 10.24B | 6.64B | 4.92B | 3.68B | 3.03B | 4.16B |
Balance Sheet | ||||||
| Total Assets | 107.87B | 90.44B | 75.54B | 67.01B | 67.25B | 68.27B |
| Cash, Cash Equivalents and Short-Term Investments | 22.20B | 27.21B | 23.54B | 20.88B | 20.43B | 26.02B |
| Total Debt | 6.04B | 6.05B | 6.05B | 5.96B | 5.36B | 5.50B |
| Total Liabilities | 21.50B | 20.72B | 18.33B | 17.88B | 16.20B | 15.54B |
| Stockholders Equity | 83.88B | 67.86B | 55.91B | 48.10B | 50.32B | 52.24B |
Cash Flow | ||||||
| Free Cash Flow | 8.48B | 9.24B | 6.17B | 6.43B | 2.48B | 4.38B |
| Operating Cash Flow | 8.80B | 10.28B | 7.34B | 7.48B | 5.24B | 4.88B |
| Investing Cash Flow | -5.87B | -6.82B | -1.86B | -1.45B | -6.00B | -14.21B |
| Financing Cash Flow | -4.21B | -3.83B | -1.54B | -3.42B | -3.71B | 5.29B |
Tencent Music Entertainment Group Class A Technical Analysis
Neutral
90.35
Price Trends
93.74
Negative
83.66
Positive
66.19
Positive
Market Momentum
-0.99
Positive
41.39
Neutral
17.84
Positive
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 90.35 is below the 20-day moving average (MA) of 95.86, below the 50-day MA of 93.74, and above the 200-day MA of 66.19, indicating a neutral trend. The MACD of -0.99 indicates Positive momentum. The RSI at 41.39 is Neutral, neither overbought nor oversold. The STOCH value of 17.84 is Positive, 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 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | HK$397.54B | 22.58 | 24.73% | ― | 10.72% | 17.05% | |
77 Outperform | HK$366.32B | 13.12 | 10.13% | ― | -1.69% | 42.04% | |
76 Outperform | HK$259.89B | 25.65 | 13.99% | ― | 10.25% | 84.17% | |
71 Outperform | HK$24.55B | 9.14 | 8.64% | 6.34% | 0.99% | 14.41% | |
60 Neutral | HK$40.35B | 279.75 | -1.14% | ― | -10.26% | -85.75% | |
45 Neutral | HK$9.27B | 113.03 | 0.85% | 4.01% | -7.61% | -90.51% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% |
* Communication Services Sector Average
HK:1698
Tencent Music Entertainment Group Class A
89.00
34.69
63.87%
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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.