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

• Market Cap: HK$184.53B
• Dividend Yield: 1.01%
• Average Volume (3M): 950.24K
• Price to Earnings (P/E): 17.2
• Beta (1Y): 1.18
• 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$99.97
• Price Target Upside: 52.63% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: HK$71.00 ▲(8.40% 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

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.

Robust free cash flow generation

Consistent and growing free cash flow enables sustained reinvestment in content, platform features, and marketing while supporting debt servicing and optional shareholder returns. Strong cash conversion reduces dependency on external financing and underpins durable competitive initiatives.

High and sustainable margins

Elevated gross and operating margins reflect scalable platform economics and high-margin subscription revenue. These margins provide a durable cushion to fund content deals and product innovation, allowing the company to maintain profitability as it pursues growth and absorbs incremental costs.

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.

Weakness in social entertainment segment

A decline in social entertainment—an important high-margin monetization channel—reduces revenue diversification and recurring virtual-goods income. Sustained weakness here pressures overall growth and may require significant product or marketing investment to restore user engagement and monetization.

Lower margins in new growth areas

Expanding into concerts and artist merchandise aids top-line diversification but introduces lower-margin revenue that can dilute group profitability. If the revenue mix shifts meaningfully toward these activities, long-term margin sustainability will depend on scale economics and tight cost management.

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 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 exhibits strong financial health with robust profitability, a solid balance sheet, and healthy cash flows. The company has managed to grow its revenue and maintain high profit margins, while keeping leverage low. Continued focus on revenue growth and maintaining cash flow strength will be key to sustaining its financial 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 TTM revenue growth rate of 4.78%. EBIT and EBITDA margins are also robust at 41.28%, indicating efficient operations. However, the revenue growth rate has slowed compared to previous years, which could be a potential concern.

Balance Sheet

The balance sheet is solid with a low debt-to-equity ratio of 0.072, indicating low leverage and financial stability. Return on equity is healthy at 14.20%, reflecting efficient use of equity capital. The equity ratio stands at 78.92%, showcasing a strong equity base. However, the company should monitor its debt levels to maintain this stability.

Cash Flow

Cash flow metrics are strong, with a free cash flow growth rate of 17.90% in the TTM period. The operating cash flow to net income ratio is 0.53, and the free cash flow to net income ratio is 0.96, indicating good cash generation relative to net income. The company has improved its free cash flow position significantly, which is a positive sign for future investments and debt servicing.

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: Negative
• Last Price: 65.50
• 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 Negative. The current price of 65.5 is below the 20-day moving average (MA) of 66.72, below the 50-day MA of 69.28, and below the 200-day MA of 77.51, indicating a bearish trend. The MACD of -1.23 indicates Negative momentum. The RSI at 43.60 is Neutral, neither overbought nor oversold. The STOCH value of 66.67 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1024	77 Outperform	HK$349.90B	18.28	25.67%	―	11.37%	16.74%
1698	73 Outperform	HK$184.53B	17.21	14.50%	1.01%	13.62%	80.52%
0772	67 Neutral	HK$36.57B	253.54	0.67%	―	-10.26%	-85.75%
9888	63 Neutral	HK$420.23B	50.45	3.29%	―	-2.92%	-57.12%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
9898	60 Neutral	HK$20.54B	6.24	12.49%	8.13%	-1.40%	22.37%
1896	49 Neutral	HK$8.53B	103.97	0.82%	4.71%	-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.

The most recent analyst rating on (HK:1698) stock is a Buy with a HK$110.70 price target. To see the full list of analyst forecasts on Tencent Music Entertainment Group Class A stock, see the HK:1698 Stock Forecast page.