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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
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Rating:73Outperform
Price Target:
HK$98.00
▲(12.00% Upside)
Tencent Music Entertainment Group's overall stock score is driven by strong earnings call results and solid financial performance. However, technical indicators suggest bearish momentum, and valuation metrics indicate moderate pricing. The company's ability to maintain growth momentum amidst slowing revenue growth and declining free cash flow will be crucial for future performance.
Tencent Music Entertainment Group Class A (1698) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$239.75B
Dividend YieldN/A
Average Volume (3M)950.24K
Price to Earnings (P/E)23.7
Beta (1Y)1.13
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. 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$109.63Price Target Upside25.29% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering19
Tencent Music Entertainment Group Class A Business Overview & Revenue Model
Company DescriptionTencent Music Entertainment Group Class A (1698) is a leading online music entertainment platform in China, operating through its subsidiaries. The company primarily focuses on music streaming services, social entertainment, and content distribution. Its core products include popular music streaming applications such as QQ Music, Kugou, and Kuwo, which offer a wide range of music content, social features, and live streaming services. Tencent Music also engages in the licensing of music content and artist management, making it a prominent player in the digital music landscape.
How the Company Makes MoneyTencent 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 Earnings Call Summary
Earnings Call Date:Aug 12, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 12, 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
87.50
Price Trends
94.79
Negative
86.45
Positive
68.95
Positive
Market Momentum
-2.00
Positive
42.51
Neutral
33.16
Neutral
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 87.5 is below the 20-day moving average (MA) of 89.59, below the 50-day MA of 94.79, and above the 200-day MA of 68.95, indicating a neutral trend. The MACD of -2.00 indicates Positive momentum. The RSI at 42.51 is Neutral, neither overbought nor oversold. The STOCH value of 33.16 is Neutral, 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$315.90B | 17.93 | 25.22% | ― | 10.72% | 17.05% | |
73 Outperform | HK$239.75B | 23.66 | 13.99% | ― | 10.25% | 84.17% | |
71 Outperform | HK$310.49B | 10.64 | 10.28% | ― | -1.69% | 42.04% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
60 Neutral | HK$21.39B | 7.82 | 10.70% | 7.48% | 0.99% | 14.41% | |
54 Neutral | $38.02B | 263.60 | 0.67% | ― | -10.26% | -85.75% | |
45 Neutral | HK$7.87B | 94.62 | 0.82% | 4.69% | -7.61% | -90.51% |
* Communication Services Sector Average
HK:1698
Tencent Music Entertainment Group Class A
87.50
43.66
99.59%
HK:0772
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Tencent Music Entertainment Group Class A Corporate Events
Tencent Music Sets Date for Q3 2025 Earnings Release
Oct 14, 2025
Tencent Music Entertainment Group announced the date for its third quarter 2025 earnings release, which was submitted to the U.S. Securities and Exchange Commission via a Form 6-K. This announcement is part of the company’s regulatory compliance with the Hong Kong Stock Exchange, where it is also listed. The release of the earnings date is an important event for stakeholders as it provides insights into the company’s financial performance and strategic direction.
The most recent analyst rating on (HK:1698) stock is a Buy with a HK$110.00 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.
Tencent Music to Announce Q3 2025 Results on November 12
Oct 14, 2025
Tencent Music Entertainment Group announced that its board of directors will review and vote on the company’s unaudited third-quarter results for the period ending September 30, 2025. The results will be published on November 12, 2025, after the Hong Kong market closes and before the U.S. market opens, potentially impacting stakeholders’ expectations and market positioning.
The most recent analyst rating on (HK:1698) stock is a Buy with a HK$110.00 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.
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.