Cloud Music Inc.: Strong Financial Performance and Strategic Improvements Support Buy RatingWe expect GPM expansion and efficiency gains to continue in 2H25/FY26. The company’s GPM/S&M expense ratio (36%/4% in 1H25) still have room to improve, compared to that of TME (44%/3%), especially in a stable competitive environment like China’s online music sector. We lift our FY25-27 operating profit forecast from RMB1.4/1.8/2.0bn to RMB1.7/1.9/2.1bn, mainly to reflect the opex control and GPM expansion. We roll forward our valuation window to FY26E, and raise our target price to PE, which is on par with global peers (previous: FY25E PE). Maintain BUY on the strong earnings prospect and southbound fund inflow. Strong music business driven by subscriber growth. Online music services revenue was up by 16% within which membership subscription revenue grew by 15% YoY to RMB2.47bn.