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$44.00
▲(10.89% Upside)
Action:ReiteratedDate: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 and rising net income reflect stronger unit economics and pricing power across TME’s services. Higher and durable profitability provides internal funding for content, product investment and dividends, reducing reliance on external financing and supporting long-term value creation.
Negative Factors
Subscription Growth Pressure
Subscription revenue is the core recurring engine for margins and valuation. Sustained competitive pressure could slow user additions or force promotional pricing, compressing ARPU and gross margins. If structural, weakened subscription dynamics would reduce long-term earnings visibility.
Read all positive and negative factors
Positive Factors
Negative Factors
Improved Profitability
Sustained margin expansion and rising net income reflect stronger unit economics and pricing power across TME’s services. Higher and durable profitability provides internal funding for content, product investment and dividends, reducing reliance on external financing and supporting long-term value creation.
Read all positive factors
Tencent Music Entertainment Group Class A (1698) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$104.88B
Dividend Yield1.01%
Average Volume (3M)950.24K
Price to Earnings (P/E)17.6
Beta (1Y)1.22
Revenue Growth15.94%
EPS Growth69.62%
CountryHK
Employees5,353
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.80
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$64.19Price Target Upside61.76% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering13
EPS Forecast (FY)3.47
Revenue Forecast (FY)HK$41.04B
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 generates revenue mainly from (1) Online Music Services and (2) Social Entertainment Services. Online Music Services primarily monetize through paid subscriptions and other music-related offerings: users pay recurring fees for premium listenin...
Tencent Music Entertainment Group Class A Earnings Call Summary
Earnings Call Date:Mar 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 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
39.68
Price Trends
49.72
Negative
58.69
Negative
72.60
Negative
Market Momentum
-3.27
Negative
41.40
Neutral
90.01
Negative
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 39.68 is above the 20-day moving average (MA) of 37.99, below the 50-day MA of 49.72, and below the 200-day MA of 72.60, indicating a neutral trend. The MACD of -3.27 indicates Negative momentum. The RSI at 41.40 is Neutral, neither overbought nor oversold. The STOCH value of 90.01 is Negative, 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$104.88B | 17.65 | 13.77% | 1.01% | 15.94% | 69.62% | |
68 Neutral | HK$189.92B | 13.56 | 25.52% | ― | 12.62% | 22.16% | |
65 Neutral | HK$16.05B | 5.39 | 12.13% | 8.13% | 0.06% | 48.33% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
53 Neutral | HK$331.42B | 59.14 | 1.73% | ― | -3.02% | -81.33% | |
47 Neutral | HK$25.70B | -39.92 | -4.08% | ― | -9.16% | -273.98% | |
47 Neutral | HK$6.96B | 13.03 | 6.13% | 4.71% | 13.41% | 210.58% |
* Communication Services Sector Average
HK:1698
Tencent Music Entertainment Group Class A
35.08
-16.63
-32.16%
HK:0772
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24.56
-2.39
-8.87%
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35.73%
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3.35
5.56%
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Maoyan Entertainment
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-0.34
-5.40%
Tencent Music Entertainment Group Class A Corporate Events
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...
Tencent Music Files Form 6-K Ahead of 2025 Earnings Release
Feb 10, 2026
Tencent Music Entertainment Group has notified investors that it has filed a Form 6-K with the U.S. Securities and Exchange Commission, linked to the timing of its fourth-quarter and full-year 2025 earnings announcement. The disclosure, made under...
Tencent Music Sets March 17 Release for Fourth-Quarter and Full-Year 2025 Results
Feb 10, 2026
Tencent Music Entertainment Group announced that its board of directors will meet on March 16, 2026 to review and vote on the company’s unaudited financial results for the fourth quarter and full year ended December 31, 2025. The move signal...
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.