Tencent Music Entertainment Group (TME) AI Stock Analysis

• Market Cap: $32.53B
• Dividend Yield: 0.76%
• Average Volume (3M): 4.90M
• Price to Earnings (P/E): 24.8
• Beta (1Y): 0.83
• Revenue Growth: 10.66%
• EPS Growth: 84.89%
• Country: US
• Employees: 5,353
• Sector: Communication Services
• Sector Strength: 97
• Industry: Internet Content & Information
• EPS (TTM): 0.22
• Shares Outstanding: 716,429,900
• 10 Day Avg. Volume: 3,752,057
• 30 Day Avg. Volume: 4,902,403
• 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: 0.87
• Enterprise Value/Revenue: 0.94
• Enterprise Value/Gross Profit: 2.14
• Enterprise Value/Ebitda: 2.92
• 1Y Price Target: $28.23
• Price Target Upside: 19.06% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12

• Rating: 75 Outperform
• Price Target: $25.00 ▲(5.44% Upside)

Tencent Music Entertainment Group's overall stock score reflects its strong financial performance and positive earnings call, which highlight robust revenue growth and strategic initiatives. However, technical analysis indicates some volatility, and the valuation is moderate. The company's challenges in social entertainment revenue and offline performance margins are notable risks.

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 Business Overview & Revenue Model

Company Description

Tencent 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 Money

Tencent 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 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.

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	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

• Technical Analysis Sentiment: Positive
• Last Price: 23.71
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 23.71 is above the 20-day moving average (MA) of 22.92, below the 50-day MA of 24.08, and above the 200-day MA of 17.95, indicating a neutral trend. The MACD of -0.22 indicates Negative momentum. The RSI at 47.73 is Neutral, neither overbought nor oversold. The STOCH value of 73.58 is Neutral, 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	―	$32.53B	24.79	14.07%	0.76%	10.66%	84.89%
SPOT	―	$130.91B	155.19	13.94%	―	15.52%	67.15%
BIDU	―	$41.71B	11.81	10.33%	―	-1.32%	42.56%
WB	―	$2.81B	8.02	10.77%	7.12%	1.21%	14.72%
Sector *	―	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
JOYY	―	$3.07B	―	-2.32%	4.60%	-7.07%	-150.40%
DOYU	―	$204.01M	―	-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.

Tencent Music Reports Robust Q2 2025 Financial Growth

Tencent Music Entertainment Group reported a strong financial performance for the second quarter of 2025, with total revenues reaching RMB8.44 billion, a 17.9% increase year-over-year. The growth was driven by a significant rise in online music services revenue, which increased by 26.4%, and a 43.2% increase in net profit. The company continues to expand its content ecosystem and partnerships, enhancing its platform value and user engagement. Notable achievements include surpassing 15 million SVIP subscribers and successfully hosting large-scale concerts, which have bolstered its brand recognition and market positioning.