Tencent Music Entertainment Group (TME) AI Stock Analysis

• Market Cap: $25.86B
• Dividend Yield: 0.97%
• Average Volume (3M): 6.29M
• Price to Earnings (P/E): 21.0
• Beta (1Y): 0.84
• Revenue Growth: 4.59%
• EPS Growth: 83.27%
• Country: US
• Employees: 5,353
• Sector: Communication Services
• Sector Strength: 86
• Industry: Internet Content & Information
• EPS (TTM): 0.38
• Shares Outstanding: 716,429,900
• 10 Day Avg. Volume: 5,622,173
• 30 Day Avg. Volume: 6,289,879
• PEG Ratio: 0.09
• Price to Book (P/B): 1.31
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 19.28
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $17.65
• Price Target Upside: -4.65% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

• Rating: 76 Outperform
• Price Target: $21.00 ▲(13.45%Upside)

Tencent Music Entertainment Group's overall score is driven by solid financial performance, strong technical indicators, and positive earnings call outcomes. While the stock shows bullish momentum, the high RSI indicates potential overvaluation, balancing the otherwise strong financial and operational performance.

Positive Factors

Earnings Growth

TME reported 4Q results with robust earnings growth (+45% y/y) as structural drivers for margin expansion continued to play out on top of their disciplined expenses management.

Financial Performance

TME delivered a clean quarter with both revenue and margins above expectations.

Shareholder Returns

The company has substantially stepped-up shareholder returns, including a $273M cash dividend for FY24 and a new $1B share repurchase program.

Negative Factors

Competition

Rising competition, particularly from lower-priced offerings, may slow new subscriber growth, especially among price-sensitive users.

Subscription Growth

Intensifying competition from lower-priced offerings has led to a lower net subscriber addition forecast, indicating a softer subscription growth outlook.

Tencent Music Entertainment Group Business Overview & Revenue Model

Company Description

Tencent Music Entertainment Group (TME) is a leading online music entertainment platform in China, operating some of the most popular music applications in the country, including QQ Music, Kugou Music, and Kuwo Music. TME provides a wide range of services, including online music streaming, live music performances, karaoke, and social entertainment experiences, catering to a vast audience with diverse musical tastes. The company leverages its comprehensive content library, user-friendly interfaces, and innovative technology to deliver engaging and personalized experiences to music enthusiasts.

How the Company Makes Money

Tencent Music Entertainment Group primarily generates revenue through two main segments: online music services and social entertainment services. The online music services segment earns money from paid subscriptions, where users pay for premium features such as high-quality streaming, offline downloads, and exclusive content. It also includes digital album sales and partnerships with music labels for licensing and distribution. The social entertainment services segment, which includes platforms like WeSing, generates revenue through virtual gifts and premium memberships, where users purchase virtual items to use within the apps or during live streaming performances. Additionally, TME has monetization partnerships with brands and advertisers, leveraging its large user base for targeted advertising and promotional campaigns.

Tencent Music Entertainment Group Financial Statement Overview

Summary

Tencent Music Entertainment Group demonstrates strong financial performance with high profitability and efficient cost management. Revenue growth is steady, and the balance sheet is conservatively leveraged with a low Debt-to-Equity Ratio. Cash flows are positive and growing, highlighting robust operational efficiency and financial stability.

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.

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.

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.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
28.99B	28.40B	27.75B	28.34B	31.24B	29.15B
	Gross Profit
12.50B	12.03B	9.79B	8.77B	9.40B	9.30B
	EBIT
11.59B	8.71B	6.06B	4.44B	2.75B	4.71B
	EBITDA
11.41B	8.23B	7.17B	5.65B	4.75B	5.55B
	Net Income Common Stockholders
9.51B	6.64B	4.92B	3.68B	3.03B	4.16B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
26.69B	27.21B	23.54B	20.88B	20.43B	26.02B
	Total Assets
98.08B	90.44B	75.54B	67.01B	67.25B	68.27B
	Total Debt
6.08B	6.05B	6.05B	5.96B	5.36B	5.50B
	Net Debt
-5.95B	-7.11B	-7.52B	-3.59B	-1.23B	-5.63B
	Total Liabilities
22.89B	20.72B	18.33B	17.88B	16.20B	15.54B
	Stockholders Equity
73.24B	67.86B	55.91B	48.10B	50.32B	52.24B
Cash Flow		Free Cash Flow
10.11B	9.24B	6.17B	6.43B	2.48B	4.38B
	Operating Cash Flow
10.11B	10.28B	7.34B	7.48B	5.24B	4.88B
	Investing Cash Flow
-4.54B	-6.82B	-1.86B	-1.45B	-6.00B	-14.21B
	Financing Cash Flow
-3.76B	-3.83B	-1.54B	-3.42B	-3.71B	5.29B

Tencent Music Entertainment Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18.51
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TME, the sentiment is Positive. The current price of 18.51 is above the 20-day moving average (MA) of 17.05, above the 50-day MA of 14.82, and above the 200-day MA of 12.45, indicating a bullish trend. The MACD of 0.95 indicates Positive momentum. The RSI at 73.42 is Negative, neither overbought nor oversold. The STOCH value of 88.04 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	76 Outperform	$25.86B	20.97	14.37%	0.97%	4.59%	83.27%
SPOT	76 Outperform	$143.01B	115.09	24.28%	―	16.07%	―
WB	73 Outperform	$2.35B	7.14	10.79%	8.29%	0.83%	22.06%
BIDU	71 Outperform	$29.88B	8.51	9.85%	―	-1.33%	32.92%
Sector *	61 Neutral	$14.60B	5.88	-4.32%	3.68%	2.75%	-30.55%
JOYY	55 Neutral	$2.49B	―	-2.48%	1.93%	-1.33%	-148.56%
DOYU	49 Neutral	$208.84M	―	-6.76%	―	-24.10%	-953.50%