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Tencent Music Entertainment Group (TME)
NYSE:TME
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Tencent Music Entertainment Group
(NYSE:TME)
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Rating:79Outperform
Price Target:
$29.00
▲(24.78% Upside)
Tencent Music Entertainment Group's strong financial performance and positive earnings call sentiment are the primary drivers of its high score. The technical analysis suggests bullish momentum, though caution is advised due to overbought signals. Valuation metrics indicate the stock may be overvalued, slightly tempering the overall score.
Positive Factors
Revenue Growth
The company's strong revenue growth indicates a robust market position and effective monetization strategies, supporting long-term business sustainability.
Subscriber Base Expansion
A growing subscriber base enhances recurring revenue streams and indicates strong brand loyalty, which is crucial for sustained business growth.
Innovations in Music Services
Innovative service offerings improve user engagement and competitive positioning, driving long-term growth and differentiation in the market.
Negative Factors
Decline in Social Entertainment Revenue
A decline in social entertainment revenue suggests challenges in diversifying income streams, potentially impacting overall revenue stability.
Gross Margin Pressure
Pressure on gross margins from higher investment areas can affect profitability, challenging the company's cost management and financial performance.
Compliance Adjustments
Regulatory compliance adjustments can limit operational flexibility and revenue potential, posing a risk to growth in regulated markets.
Tencent Music Entertainment Group (TME) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$32.18B
Dividend Yield0.77%
Average Volume (3M)5.88M
Price to Earnings (P/E)24.8
Beta (1Y)0.81
Revenue Growth10.66%
EPS Growth84.89%
CountryUS
Employees5,353
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.22
Shares Outstanding716,429,900
10 Day Avg. Volume5,511,755
30 Day Avg. Volume5,883,671
Financial Highlights & Ratios
PEG Ratio0.54
Price to Book (P/B)1.91
Price to Sales (P/S)4.57
P/FCF Ratio14.03
Enterprise Value/Market Cap0.88
Enterprise Value/Revenue0.94
Enterprise Value/Gross Profit2.14
Enterprise Value/Ebitda2.92
Forecast
1Y Price Target
$28.53Price Target Upside22.76% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
Tencent Music Entertainment Group Business Overview & Revenue Model
Company DescriptionTencent Music Entertainment Group (TME) is a leading online music entertainment platform in China, operating primarily through its flagship apps: QQ Music, Kugou, and Kuwo. The company offers a diverse range of services including music streaming, online karaoke, and social entertainment features. TME also engages in music publishing and provides a platform for independent artists to distribute their music, making it a comprehensive ecosystem for music lovers and creators alike.
How the Company Makes MoneyTencent Music generates revenue through a multi-faceted business model primarily focused on subscription services, digital music sales, and advertising. Its key revenue streams include: 1) Subscription Fees: TME offers premium subscription plans for users seeking an ad-free experience and additional features, contributing significantly to its revenue. 2) Digital Music Sales: The company sells digital albums and individual tracks, allowing users to purchase music directly. 3) Advertising: TME generates income from advertising by allowing brands to promote their products through its platforms, leveraging its vast user base. 4) Social Entertainment: The company includes social features, such as online karaoke, which attracts users and creates additional monetization opportunities. Additionally, TME has established partnerships with various music labels and artists, enhancing its content library and boosting user engagement, which further supports its revenue growth.
Tencent Music Entertainment Group Earnings Call Summary
Earnings Call Date:Aug 12, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 18, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance with substantial revenue growth driven by online music subscriptions and advertising. Strategic initiatives in concerts and merchandise have shown promising results, although there are challenges related to social entertainment revenue and offline performance margins.Q2-2025 Updates
Positive Updates
Record Revenue Growth
Total revenue reached RMB 8.4 billion, up by 18% year-over-year, driven by strong growth in new subscription and advertising services.
Significant Online Music Revenue Increase
Online music revenues grew 26% year-on-year to RMB 6.9 billion, supported by expansion in the subscriber base and ARPPU.
Strong Subscriber Growth
SVIP subscribers exceeded 15 million, with significant enhancements in subscriber benefits and offerings.
Successful Concert and Artist Merchandise Initiatives
Revenue from concerts and artist merchandise more than doubled year-over-year, validating the strategy of building a comprehensive music entertainment platform.
Innovative Product Launches
The launch of the interactive community 'Bubble' on QQ Music enables users to engage directly with hundreds of K-pop artists.
Improved Profit Margins
Gross margin rose by 2.4 percentage points year-on-year to 44.4%, driven by improved cost efficiencies and strong growth in subscriptions and advertising.
Promising Non-Subscription Services
Strong traction in non-subscription services, including advertising and artist-related merchandise, contributing to revenue growth.
Negative Updates
Decline in Social Entertainment Revenue
Social entertainment services and other revenues were RMB 1.6 billion, down by 9% year-on-year due to adjustments and more stringent compliance procedures.
Impact of Concert Timing on Revenue
Concert and event revenues are subject to short-term fluctuations due to scheduling and logistical factors, affecting revenue predictability.
Low Gross Margin in Offline Performances
Offline concerts and fan economy initiatives have lower gross margins, potentially impacting overall profit margins.
Company Guidance
During Tencent Music Entertainment Group's Second Quarter 2025 Earnings Conference Call, the company reported strong financial performance with a record-high total revenue of RMB 8.4 billion, marking an 18% year-over-year increase. Online music revenues grew by 26% year-on-year to RMB 6.9 billion, driven by a 17% rise in net subscription revenues and an increase in monthly ARPPU to RMB 11.2. The company's SVIP subscribers surpassed 15 million, while advertising revenue continued its upward trajectory. Net profit increased by 38% to RMB 2.5 billion, with a non-IFRS net profit of RMB 2.6 billion. Operating expenses were managed effectively, contributing to a 2.4 percentage point increase in gross margin to 44.4%. The company emphasized its strategic focus on diversifying music services, with promising growth in non-subscription services such as concerts and artist merchandise, and maintained optimism for continued high-quality growth in the music entertainment industry.Tencent Music Entertainment Group Financial Statement Overview
Summary
Tencent Music Entertainment Group demonstrates strong financial performance with steady revenue growth, high profitability, and efficient cost management. The balance sheet is conservatively leveraged, and cash flow trends are positive, indicating robust operational efficiency and strategic financial management.Income Statement
Tencent Music Entertainment Group exhibits strong financial health with increasing revenue and profitability. The TTM (Trailing-Twelve-Months) Gross Profit Margin stands at 43.12%, and the Net Profit Margin is 32.82%, indicating efficient cost management and solid profitability. Revenue growth has been moderate, with a recent increase of 2.07% from the previous annual report, showcasing steady expansion. EBIT and EBITDA margins are robust at 39.97% and 39.36% respectively, reflecting strong operational performance.85
Very Positive
Balance Sheet
The balance sheet is strong, with a low Debt-to-Equity Ratio of 0.08, indicating low leverage and a conservative financial structure. Return on Equity (ROE) is impressive at 12.99% for the TTM, demonstrating effective utilization of shareholder funds. The Equity Ratio is high at 74.67%, suggesting a solid asset base funded by equity. The company maintains a healthy liquidity position with significant cash reserves.80
Positive
Cash Flow
Cash flow analysis shows a positive trend, with Free Cash Flow growing by 9.36% in the latest period. The Operating Cash Flow to Net Income ratio is 1.06, indicating efficient cash generation relative to profit. Free Cash Flow to Net Income ratio is strong at 1.06, highlighting effective cash management. The company has maintained steady cash flow growth, supporting its operational and strategic objectives.78
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 | 9.70B | 8.23B | 5.72B | 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 Technical Analysis
Neutral
23.24
Price Trends
24.11
Negative
21.61
Positive
17.14
Positive
Market Momentum
-0.40
Positive
42.44
Neutral
30.42
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TME, the sentiment is Neutral. The current price of 23.24 is below the 20-day moving average (MA) of 24.10, below the 50-day MA of 24.11, and above the 200-day MA of 17.14, indicating a neutral trend. The MACD of -0.40 indicates Positive momentum. The RSI at 42.44 is Neutral, neither overbought nor oversold. The STOCH value of 30.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TME.
Tencent Music Entertainment Group Risk Analysis
Tencent Music Entertainment Group disclosed 101 risk factors in its most recent earnings report. Tencent Music Entertainment Group 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 Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $32.18B | 24.79 | 14.07% | 0.77% | 10.66% | 84.89% | |
76 Outperform | $49.18B | 12.76 | 10.33% | ― | -1.32% | 42.56% | |
74 Outperform | $3.13B | 8.85 | 10.77% | 6.49% | 1.21% | 14.72% | |
72 Outperform | $137.90B | 160.53 | 13.94% | ― | 15.52% | 67.15% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
59 Neutral | $3.00B | ― | -2.32% | 4.85% | -7.07% | -150.40% | |
46 Neutral | $220.00M | ― | -4.77% | ― | -10.98% | -71.11% |
* Communication Services Sector Average
TME
Tencent Music Entertainment Group
23.24
11.03
90.34%
BIDU
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137.90
33.84
32.52%
JOYY
JOYY
58.09
25.48
78.14%
WB
Weibo
12.63
3.64
40.49%
SPOT
Spotify
674.75
300.77
80.42%
DOYU
DouYu International Holdings
7.40
3.70
100.00%
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.