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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:71Outperform
Price Target:
$23.00
▲(31.73% 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 (TME) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$24.98B
Dividend Yield1.02%
Average Volume (3M)4.26M
Price to Earnings (P/E)17.9
Beta (1Y)0.83
Revenue Growth13.86%
EPS Growth80.97%
CountryUS
Employees5,353
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.20
Shares Outstanding716,429,900
10 Day Avg. Volume4,753,232
30 Day Avg. Volume4,262,181
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 Cap10.08
Enterprise Value/Revenue7.94
Enterprise Value/Gross Profit18.08
Enterprise Value/Ebitda23.89
Forecast
1Y Price Target
$26.13Price Target Upside49.66% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)0.91
Revenue Forecast (FY)$5.28B
Tencent Music Entertainment Group Business Overview & Revenue Model
Company DescriptionTencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover and listen to music in personalized ways; and WeSing, which enables users to have fun by singing and interacting with friends, sharing their singing performances with friends, and discovering songs that others have sung. The company also operates Kugou Music, Kuwo Music, WeSing, QQ Music, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with those interested in their performance; and Kuwo Changting, an audio platform that offers users various audio content, including audio books, cross-talks, radio dramas, and other entertainment. In addition, it sells music-related merchandise, including Kugou headsets, smart speakers, WeSing karaoke microphones, and Hi-Fi systems; and offers online music event ticketing services, as well as services to smart device and automobile makers to build and operate music services on devices and vehicles. Tencent Music Entertainment Group has a strategic partnership with China Literature. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.
How the Company Makes MoneyTencent 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 Earnings Call Summary
Earnings Call Date:Nov 12, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 23, 2026
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in revenues and music subscriptions, driven by strategic partnerships, international expansion, and innovative user engagement strategies. However, challenges remain with the decline in social entertainment revenues and the lower gross margins in new growth areas. Overall, the positive aspects significantly outweigh the negatives.Q3-2025 Updates
Positive Updates
Strong Financial Performance
Total revenues increased by 21% year-on-year to RMB 8.5 billion, marking the highest revenue growth since Q1 2021. Net profit increased by 29% to RMB 2.2 billion.
Music Subscription Growth
Music subscription revenues grew 70% year-on-year to RMB 4.5 billion, with monthly ARPPU reaching RMB 11.9 compared to RMB 10.8 in the same period last year.
Expansion of Concerts and Events
Successfully hosted several international concerts and events, including G-Dragon's tour across 6 cities, drawing over 150,000 attendees and leading to a significant increase in live concert revenue.
Notable Partnerships and Content Expansion
Strategic partnerships with Tencent Games, Blizzard Entertainment, and others to expand music library, including collaborations on game soundtracks and anime music.
Innovative User Engagement
Introduction of AI-powered features and enhancements, including Automix and personalized playlists, to deepen user engagement and increase content consumption.
Negative Updates
Social Entertainment Revenue Decline
Social entertainment service and other revenues decreased by 3% year-on-year to RMB 1.5 billion.
Lower Gross Margin for New Growth Areas
New growth areas such as offline performances and artist-related merchandise sales have lower gross margins, causing potential fluctuations in overall gross margin.
Company Guidance
In the third quarter of 2025, Tencent Music Entertainment Group showcased impressive financial results, highlighted by a 21% year-on-year increase in total revenues, reaching RMB 8.5 billion. The online music segment experienced robust growth, with revenues climbing 27% year-on-year to RMB 7 billion, and music subscription revenues surging 70% year-on-year to RMB 4.5 billion. The company's monthly ARPPU rose to RMB 11.9, up from RMB 10.8 in the same period last year, significantly driven by the expansion in the SVIP membership program. Offline performances and artist-related merchandise sales also exhibited a notable triple-digit year-on-year revenue growth, with successful international concerts and events contributing to this rise. Meanwhile, social entertainment services and other revenues slightly declined by 3% year-on-year, and gross margin improved by 0.9 percentage points to 43.5%. The company's net profit surged by 29% to RMB 2.2 billion, and non-IFRS net profit rose by 28% to RMB 2.5 billion. Going forward, Tencent Music aims to sustain high-quality growth through a dual-engine strategy focusing on platform and content ecosystem development, with expectations for continued strong performance in both subscription and non-subscription segments.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.85
Very Positive
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.78
Positive
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.82
Very 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 | 19.44B | 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
Negative
17.46
Price Trends
18.48
Negative
21.18
Negative
19.65
Negative
Market Momentum
-0.38
Negative
36.41
Neutral
35.49
Neutral
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 17.46 is below the 20-day moving average (MA) of 17.57, below the 50-day MA of 18.48, and below the 200-day MA of 19.65, indicating a bearish trend. The MACD of -0.38 indicates Negative momentum. The RSI at 36.41 is Neutral, neither overbought nor oversold. The STOCH value of 35.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $24.98B | 17.88 | 14.47% | 1.02% | 13.86% | 80.97% | |
68 Neutral | $51.17B | 47.72 | 3.31% | ― | -2.70% | -56.75% | |
66 Neutral | $108.90B | 65.94 | 22.10% | ― | 14.10% | 102.32% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
60 Neutral | $3.56B | -33.16 | -2.29% | 4.25% | -7.60% | -160.75% | |
60 Neutral | $2.71B | 6.41 | 12.46% | 8.13% | -1.29% | 22.48% | |
41 Neutral | $207.33M | -7.59 | -6.03% | ― | -8.99% | -4.10% |
* Communication Services Sector Average
TME
Tencent Music Entertainment Group
16.60
5.95
55.87%
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508.04
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4.64%
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6.77
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10.44%
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.