Tencent Music Entertainment Group (TME) AI Stock Analysis

• Market Cap: $26.87B
• Dividend Yield: 0.96%
• Average Volume (3M): 5.64M
• Price to Earnings (P/E): 19.4
• Beta (1Y): 0.93
• Revenue Growth: 13.86%
• EPS Growth: 80.97%
• Country: US
• Employees: 5,353
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 0.19
• Shares Outstanding: 716,429,900
• 10 Day Avg. Volume: 8,761,968
• 30 Day Avg. Volume: 5,640,752
• PEG Ratio: 0.54
• Price to Book (P/B): 1.91
• Price to Sales (P/S): 4.57
• P/FCF Ratio: 14.03
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 1.08
• Enterprise Value/Gross Profit: 2.45
• Enterprise Value/Ebitda: 3.24
• 1Y Price Target: $27.57
• Price Target Upside: 47.43% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): 0.95
• Revenue Forecast (FY): $4.57B

• Rating: 71 Outperform
• Price Target: $23.00 ▲(22.99% Upside)

Tencent Music Entertainment Group's strong financial performance and positive earnings call sentiment are the primary drivers of its stock score. However, bearish technical indicators and moderate valuation metrics slightly offset these strengths. The company's strategic growth initiatives and robust subscription revenue growth provide a solid foundation for future performance.

Positive Factors

Revenue Growth

Strong revenue growth indicates expanding market reach and effective monetization strategies, supporting long-term business sustainability.

Music Subscription Growth

Significant growth in subscription revenues reflects successful user acquisition and retention, enhancing recurring revenue streams.

Strategic Partnerships

Strategic partnerships expand content offerings, strengthening competitive position and attracting more users to the platform.

Negative Factors

Free Cash Flow Decline

Declining free cash flow growth could limit reinvestment capabilities and affect long-term financial flexibility.

Social Entertainment Revenue Decline

Decline in social entertainment revenues suggests challenges in diversifying income streams, potentially impacting overall revenue growth.

Lower Gross Margin in New Areas

Lower margins in new growth areas could pressure overall profitability, affecting long-term margin sustainability.

Tencent Music Entertainment Group Business Overview & Revenue Model

Company Description

Tencent Music Entertainment Group (TME) is a leading online music entertainment platform in China, primarily focused on music streaming services. The company operates several popular platforms, including QQ Music, Kugou, and Kuwo, catering to a diverse audience with a vast library of music, live streaming, and video content. TME is dedicated to enhancing the music experience through technology, providing features such as personalized playlists, social sharing, and exclusive content, while also supporting music creators through various monetization avenues.

How the Company Makes Money

Tencent Music generates revenue through multiple streams. The primary sources include subscription services, where users pay for premium memberships that offer ad-free listening, offline downloads, and enhanced features. Additionally, the company earns revenue from advertising on its free-tier services, leveraging its extensive user base to attract advertisers. TME also collaborates with record labels and artists, sharing revenue from music sales and licensing deals. Live streaming events and concerts provide another revenue avenue, as the platform enables artists to monetize performances. Strategic partnerships with other tech companies and music distributors further enhance its market position and revenue potential.

Tencent Music Entertainment Group Financial Statement Overview

Summary

Tencent Music Entertainment Group demonstrates strong financial health with robust profitability and efficient cash flow management. The company has a solid balance sheet with low leverage, though revenue growth has experienced some fluctuations. Overall, the financial stability and profitability position it well for future growth.

Income Statement

Tencent Music Entertainment Group shows strong profitability with a TTM gross profit margin of 43.72% and a net profit margin of 33.83%. The company has demonstrated consistent revenue growth, with a notable increase of 4.78% in the TTM period. EBIT and EBITDA margins are robust at 41.28%, indicating efficient operational management. However, the revenue growth rate has fluctuated over the years, with some periods of decline.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.072 in the TTM period, reflecting prudent financial management. The return on equity is strong at 14.20%, showcasing effective use of shareholder funds. The equity ratio stands at a solid 78.92%, indicating a strong capital base. However, the slight increase in debt levels over the years warrants monitoring.

Cash Flow

Tencent Music's cash flow position is strong, with a significant free cash flow growth rate of 17.90% in the TTM period. The operating cash flow to net income ratio is 0.53, and the free cash flow to net income ratio is 0.96, indicating efficient cash conversion. Although there have been fluctuations in free cash flow growth in previous years, the recent trend is positive.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	31.72B	28.40B	27.75B	28.34B	31.24B	29.15B
Gross Profit	13.93B	12.03B	9.79B	8.77B	9.40B	9.30B
EBITDA	10.54B	9.81B	5.72B	5.65B	4.75B	5.55B
Net Income	10.81B	6.64B	4.92B	3.68B	3.03B	4.16B
Balance Sheet
Total Assets	104.87B	90.44B	75.54B	67.01B	67.25B	68.27B
Cash, Cash Equivalents and Short-Term Investments	22.32B	27.21B	23.54B	20.88B	20.43B	26.02B
Total Debt	3.87B	6.05B	6.05B	5.96B	5.36B	5.50B
Total Liabilities	19.43B	20.72B	18.33B	17.88B	16.20B	15.54B
Stockholders Equity	82.75B	67.86B	55.91B	48.10B	50.32B	52.24B
Cash Flow
Free Cash Flow	10.00B	9.24B	6.17B	6.43B	2.48B	4.38B
Operating Cash Flow	10.32B	10.28B	7.34B	7.48B	5.24B	4.88B
Investing Cash Flow	-3.77B	-6.82B	-1.86B	-1.45B	-6.00B	-14.21B
Financing Cash Flow	-5.45B	-3.83B	-1.54B	-3.42B	-3.71B	5.29B

Tencent Music Entertainment Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 18.70
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TME, the sentiment is Negative. The current price of 18.7 is below the 20-day moving average (MA) of 21.54, below the 50-day MA of 22.87, and above the 200-day MA of 18.70, indicating a neutral trend. The MACD of -1.14 indicates Positive momentum. The RSI at 26.37 is Positive, neither overbought nor oversold. The STOCH value of 16.65 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TME.

Tencent Music Entertainment Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TME	71 Outperform	$26.87B	19.39	14.47%	0.96%	13.86%	80.97%
SPOT	66 Neutral	$129.94B	82.61	22.10%	―	14.10%	102.32%
BIDU	66 Neutral	$41.42B	10.48	10.33%	―	-1.32%	42.56%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
WB	60 Neutral	$2.55B	7.13	10.77%	8.24%	1.21%	14.72%
JOYY	59 Neutral	$3.01B	―	-2.32%	4.80%	-7.07%	-150.40%
DOYU	41 Neutral	$202.50M	-7.23	-4.77%	―	-10.98%	-71.11%

Tencent Music Entertainment Group Corporate Events

Tencent Music Appoints New Audit Committee Member

On September 23, 2025, Tencent Music Entertainment Group announced the appointment of Ms. Jeanette Kim Yum Chan as a member of its audit committee. Ms. Chan, who has been an independent director on the Board since September 2022, brings extensive experience from her role at Airwallex and her previous work in cross-border mergers and acquisitions. This strategic appointment is expected to strengthen the company’s governance and oversight capabilities, potentially enhancing its industry positioning and stakeholder confidence.