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Tencent Music Entertainment Group Class A
(1698)
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Rating:74Outperform
Price Target:
HK$35.00
▲(2.22% Upside)
Action:Reiterated
Date:06/12/26
The score is driven primarily by strong financial performance (material margin and earnings expansion plus very low leverage) and supportive valuation (low P/E with a moderate dividend). This is materially offset by weak technicals, with the stock in a sustained downtrend (well below 100/200-day averages and negative MACD).
Positive Factors
High margin profitability
TME's materially expanded gross and net margins and 10.77B net income in 2025 indicate durable earnings power from its platform economics. Higher margins provide sustained cash generation and buffer against cyclicality, supporting reinvestment and shareholder returns over months to years.
Negative Factors
Uneven revenue growth history
Historical revenue declines and an inconsistent growth profile suggest structural demand or competitive pressures that can hinder sustainably scaling the business. Inconsistent top-line trends raise execution risk for maintaining the margin gains and cash generation over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
High margin profitability
TME's materially expanded gross and net margins and 10.77B net income in 2025 indicate durable earnings power from its platform economics. Higher margins provide sustained cash generation and buffer against cyclicality, supporting reinvestment and shareholder returns over months to years.
Read all positive factors
Tencent Music Entertainment Group Class A (1698) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$90.20B
Dividend Yield1.01%
Average Volume (3M)950.24K
Price to Earnings (P/E)9.9
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$54.79Price Target Upside60.00% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)3.5
Revenue Forecast (FY)HK$41.04B
Tencent Music Entertainment Group Class A Business Overview & Revenue Model
Company Description
Tencent Music Entertainment Group (TME) is a prominent digital music and entertainment provider within the People's Republic of China, delivering a comprehensive suite of services including music streaming, online karaoke, and interactive live per...
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 | 14.40B | 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
35.87
Negative
43.58
Negative
61.14
Negative
Market Momentum
-1.12
Positive
31.60
Neutral
10.12
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 34.24 is below the 20-day moving average (MA) of 34.89, below the 50-day MA of 35.87, and below the 200-day MA of 61.14, indicating a bearish trend. The MACD of -1.12 indicates Positive momentum. The RSI at 31.60 is Neutral, neither overbought nor oversold. The STOCH value of 10.12 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 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | HK$90.20B | 9.93 | 10.97% | 1.01% | 17.42% | -3.31% | |
72 Outperform | HK$5.21B | 8.15 | 6.13% | 4.71% | 13.41% | 210.17% | |
68 Neutral | HK$13.55B | 4.52 | 9.89% | 8.13% | 1.60% | 4.87% | |
64 Neutral | HK$178.42B | 8.77 | 22.83% | ― | 12.58% | 17.25% | |
62 Neutral | HK$2.55B | 9.45 | 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$574.62M | -81.84 | -2.11% | 4.48% | 277.10% | -143.33% |
* Communication Services Sector Average
HK:1698
Tencent Music Entertainment Group Class A
32.88
-41.05
-55.53%
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Tencent Music Entertainment Group Class A Corporate Events
Tencent Music Issues Shares for Ximalaya Deal, Files U.S. Form D
Jun 1, 2026
Tencent Music Entertainment Group has disclosed that it delivered Class A ordinary shares to a U.S. shareholder of Ximalaya Inc. as part of the consideration for its recently completed acquisition of the audio platform. The move underscores Tencen...
Tencent Music Names New Hong Kong Process Agent for Legal Notices
Jun 1, 2026
Tencent Music Entertainment Group has announced a change to its authorized representative for accepting legal process and notices in Hong Kong, as required under local listing rules and company law. With effect from June 1, 2026, Mr. Lee Leong Yin...
Tencent Music Files Form 6-K Ahead of Forthcoming Annual General Meeting
May 20, 2026
Tencent Music Entertainment Group has notified investors that it filed a Form 6-K with the U.S. Securities and Exchange Commission on May 20, 2026, in connection with its forthcoming annual general meeting. The filing includes the AGM notice and v...
Tencent Music Sets June 2026 AGM to Vote on Auditor and Governance Overhaul
May 20, 2026
Tencent Music Entertainment Group has called its annual general meeting for June 30, 2026 in Hong Kong, where shareholders will review the company’s 2025 financial statements and address key governance items. The meeting underscores the grou...
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...
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.