Investment Rating - The report maintains a "Buy" rating for Tencent Music [5] Core Views - The company is expected to see continuous improvement in online music revenue and profit margins due to the growth in paid users and ARPPU [2] - The forecasted net profits for the years 2024 to 2026 are 6.644 billion, 7.645 billion, and 9.133 billion CNY respectively, with a target price set at 66.89 HKD [2][5] Financial Performance Summary - For 2024, the company anticipates total revenue of 28.401 billion CNY, with a year-on-year growth of 2.3% [12] - The operating profit for 2024 is projected to be 7.349 billion CNY, reflecting a significant year-on-year increase of 53.8% [12] - The net profit attributable to the parent company for 2024 is expected to be 6.644 billion CNY, with a year-on-year growth of 35.0% [12] - The gross margin is forecasted to improve to 42.3% in 2024, up from 35.3% in 2023 [12] - The net margin is projected to reach 23.4% in 2024, compared to 17.7% in 2023 [12] - The company’s P/E ratio for 2025 is estimated at 26.1 times [12] Revenue Breakdown - In Q4 2024, the online music service revenue is expected to be 58.3 billion CNY, showing a year-on-year increase of 16.1% [9] - The social entertainment service revenue for Q4 2024 is projected at 16.3 billion CNY, a decrease of 13.0% year-on-year [9] - The total revenue for 2025 is anticipated to reach 310 billion CNY, reflecting a year-on-year growth of 9% [9]

Investment Rating - The report maintains a "Buy" rating for Tencent Music [5] Core Views - The company is expected to see continuous improvement in online music revenue and profit margins due to the growth in paid users and ARPPU [2] - The projected net profits for the years 2024 to 2026 are 66 billion, 76 billion, and 91 billion CNY respectively, with a target price set at 66.89 HKD [2] Financial Performance Summary - For 2024, the company anticipates revenue of 28.4 billion CNY, reflecting a year-on-year growth of 2.3% [12] - The operating profit for 2024 is projected to be 7.35 billion CNY, with a significant year-on-year increase of 53.8% [12] - The net profit attributable to the parent company for 2024 is expected to reach 6.64 billion CNY, marking a 35% increase year-on-year [12] - The gross margin is forecasted to improve to 42.3% in 2024, up from 35.3% in 2023 [12] - The net margin is projected to rise to 23.4% in 2024, compared to 17.7% in 2023 [12] - The return on equity (ROE) is expected to be 10.7% in 2024, increasing from 9.5% in 2023 [12] Revenue Breakdown - Online music service revenue for Q4 is reported at 58.3 billion CNY, showing a year-on-year increase of 16.1% [9] - Social entertainment service revenue for Q4 is 16.3 billion CNY, reflecting a year-on-year decrease of 13% [9] - The company expects total revenue for 2025 to reach 310 billion CNY, representing a year-on-year growth of 9% [9] User Metrics - The monthly active users (MAU) for Q4 stand at 560 million, a decrease of 3.5% year-on-year [9] - The monthly paying users (MPU) reached 120 million, an increase of 13.4% year-on-year [9] - The average revenue per paying user (ARPPU) is reported at 11 CNY per month, with expectations for it to rise to 11.3 CNY in Q1 2025 [9]

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME) with a current price of $15.09 and a fair value of $16.36 [9][40]. Core Insights - The report highlights that Tencent Music's profit performance exceeded expectations, balancing membership growth and ARPU (Average Revenue Per User) [3][9]. - The company is expected to continue enhancing its SVIP (Super VIP) membership scale and ARPU, leading to steady revenue growth [9][34]. - The online music revenue for Q4 2024 was reported at 58.31 billion RMB, showing a year-over-year increase of 16% [9][34]. Financial Performance Summary - **Revenue Forecast**: - 2023A: 27,752 million RMB - 2024A: 28,401 million RMB (growth rate: 2.3%) - 2025E: 30,973 million RMB (growth rate: 9.1%) - 2026E: 35,313 million RMB (growth rate: 14.0%) - 2027E: 38,160 million RMB (growth rate: 8.1%) [4] - **Net Profit Forecast**: - 2023A: 5,923 million RMB - 2024A: 7,671 million RMB (growth rate: 29.5%) - 2025E: 8,699 million RMB (growth rate: 13.4%) - 2026E: 10,359 million RMB (growth rate: 19.1%) - 2027E: 11,645 million RMB (growth rate: 12.4%) [4] - **EPS and Valuation Ratios**: - EPS for 2025E is projected at 5.58 RMB, with a P/E ratio of 21.60 [4]. - The report anticipates a continuous improvement in gross margin, reaching 45.1% and 47.4% in 2025 and 2026, respectively [35]. Business Segment Performance - **Online Music Business**: - Expected to generate revenues of 252.31 billion RMB and 298.59 billion RMB in 2025 and 2026, respectively, with growth rates of 16% and 18% [34]. - The net profit margin for the online music segment is projected to be 27% and 29% for 2025 and 2026 [36]. - **Social Entertainment Business**: - Revenue is expected to decline, with projections of 57.42 billion RMB and 54.55 billion RMB for 2025 and 2026, reflecting a year-over-year decrease of 14% and 5% [34][36]. Valuation Analysis - The fair value of Tencent Music is calculated at $16.36 per ADS, based on a segmented valuation approach [40]. - The online music business is valued at 28x P/E, while the social entertainment business is valued at 9x P/E [41].

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.US/1698.HK) and raises the target price to $18 or HKD 70, indicating a potential upside of 19% from the current price of $15.09 [3][5]. Core Insights - Tencent Music's Q4 2024 revenue reached RMB 74.6 billion, a year-on-year increase of 8.2%, surpassing market expectations by 2.4%, primarily driven by better-than-expected social entertainment service revenue [1]. - The adjusted net profit for Q4 2024 was RMB 22.8 billion, exceeding market expectations of RMB 19.4 billion, attributed to improved gross profit and optimized operating expenses [1]. - The online music service revenue grew by 16.1% year-on-year in Q4 2024, supported by subscription and advertising revenue growth [2]. - The report forecasts continued growth in subscription revenue, with an expected ARPU increase to nearly RMB 12 by Q4 2025 [2]. - Social entertainment service revenue showed a sequential recovery, with a 6.0% increase quarter-on-quarter, although it still faced a year-on-year decline of 13.0% [2]. Financial Projections - The report projects the following financial metrics for Tencent Music: - FY24 revenue: RMB 28,401 million - FY25E revenue: RMB 30,817 million - FY26E revenue: RMB 34,176 million - FY27E revenue: RMB 37,711 million - Adjusted net profit for FY25E: RMB 8,627 million [4][10]. - The adjusted net profit margin is expected to improve, with FY25E and FY26E adjusted net profit margins projected at 28.0% and 28.5%, respectively [10].

Investment Rating - The investment rating for Tencent Music is "Buy" [7][11]. Core Views - The report highlights that Tencent Music's Q4 2024 performance exceeded expectations, driven by robust growth in paid user numbers and an increase in ARPPU (Average Revenue Per Paying User) [2][4]. - The company is expected to maintain its leading position in the industry, with strong integration capabilities and potential for margin expansion [3][4]. Summary by Sections Financial Performance - In Q4 2024, Tencent Music reported revenue of RMB 74.6 billion, a year-on-year increase of 8.2%, and an adjusted net profit of RMB 24 billion, up 43% year-on-year [1][4]. - Online music revenue grew by 16% to RMB 58.3 billion, with subscription revenue increasing by 18% to RMB 40.3 billion [2]. User Growth and ARPPU - The number of online paying users increased by 13.4% year-on-year to 121 million, aligning with expectations [2]. - ARPPU rose to RMB 11.1, reflecting a sequential increase driven by strong growth in SVIP (Super VIP) memberships [2][3]. Profitability and Margin Outlook - The gross margin for Q4 2024 was 43.6%, an increase of 5.3 percentage points year-on-year [3]. - The report anticipates further improvement in gross margin to 45% by 2025, supported by growth in paid users and a decrease in revenue share from live streaming [3]. Valuation and Target Price - The adjusted net profit forecasts for 2025-2027 have been raised to RMB 86.7 billion, RMB 95.4 billion, and RMB 107.4 billion, respectively [4][11]. - The target price is set at USD 19.10 or HKD 68.43, based on a 25x PE multiple for 2025 [4][11].

Core Viewpoint - Goldman Sachs sets a 12-month target price of HKD 52.6 for Tencent Music (01698) and maintains a "Buy" rating, highlighting strong financial performance and user growth [1][2]. Financial Performance - Tencent Music's gross margin reached a historical high of 43.6%, up 5 percentage points year-on-year and 1 percentage point quarter-on-quarter, exceeding Goldman Sachs' expectation of 42.9% [1][2]. - Operating profit margin increased by 8 percentage points year-on-year and 3.5 percentage points quarter-on-quarter, indicating robust operational efficiency [1]. - The company reported a quarterly net addition of 2 million subscription users, with average revenue per user (ARPU) showing quarter-on-quarter growth [1][3]. - Total operating expenses decreased by 7% year-on-year and 4% quarter-on-quarter, reaching the lowest level since Q2 2019, attributed to effective control over general and administrative expenses and R&D costs [1]. User Growth and Revenue - For Q4 2024, Tencent Music's revenue slightly exceeded expectations with an 8% year-on-year growth, driven by a 16% increase in online music service revenue and strong performance in social entertainment [2]. - The adjusted net profit grew by 45% year-on-year, surpassing market expectations by 18%, with growth accelerating compared to previous quarters [2]. Future Outlook - The target for Q1 2025 is to add over 2 million subscription users, with a focus on balancing user growth and ARPU [3]. - The gross margin is close to the company's mid-term target of 45%, with potential for further improvement through operational leverage and revenue share enhancement [3]. - The company aims to leverage artificial intelligence to personalize services and enhance user experiences [3]. Shareholder Returns - Tencent Music announced a dividend of USD 0.18 per American Depositary Share (ADS) for 2024, a 30% increase from the 2023 fiscal year, and approved a new stock buyback plan of up to USD 1 billion over 24 months starting March 2025 [4].

Core Viewpoint - Tencent Music Entertainment Group has demonstrated steady growth, becoming a focal point for investors following the release of its latest financial results, which show a dual increase in revenue and net profit, indicating resilience and robust development [1][2]. Financial Performance - For the fiscal year 2024, Tencent Music reported total revenue of 28.4 billion RMB, a year-on-year increase of 2.3%, and a net profit of 8.14 billion RMB, reflecting a growth of 30.7% [1]. - In the fourth quarter, total revenue reached 7.46 billion RMB, up 8.2% year-on-year, with adjusted net profit increasing by 43% to 2.4 billion RMB [2]. User Growth and Revenue Drivers - The number of online music paying users grew by 13.4% year-on-year to 121 million, with average revenue per paying user (ARPPU) rising to 11.1 RMB [3]. - Online music subscription revenue for the fourth quarter increased by 17.9% to 4.03 billion RMB, driven by the growth in paying users and ARPPU [3]. Strategic Initiatives - Tencent Music's "content and platform dual-wing" strategy has been pivotal in driving growth, enhancing user engagement through diverse content offerings and improved platform functionalities [4][5]. - The company has strengthened partnerships with record labels and expanded its content library, including collaborations with major entertainment companies and classic artists [4][5]. Market Position and Valuation - Tencent Music's business model, which has achieved profitability earlier than similar platforms like Spotify, positions it favorably for future growth, particularly in user penetration and ARPPU [7]. - The announcement of a cash dividend of approximately 273 million USD and a stock buyback plan of up to 1 billion USD over the next 24 months underscores the company's strong financial health and management's confidence in future growth [7][8]. Investor Sentiment - Several brokerage firms have issued positive ratings for Tencent Music, highlighting its robust operational strategies and predictable performance, which enhance investor confidence [6][8].

Financial Performance - Total revenue for Q4 2024 was RMB 7.46 billion (USD 1.02 billion), representing an 8.2% year-over-year increase, driven by strong growth in online music services[9]. - Net profit for Q4 2024 was RMB 2.08 billion (USD 284 million), a 47.3% year-over-year increase, while net profit attributable to equity holders rose by 49.8% to RMB 1.96 billion (USD 268 million)[9]. - For the full year 2024, total revenue reached RMB 28.4 billion (USD 3.89 billion), a 2.3% year-over-year increase[9]. - Full year operating profit increased by 43.8% year-over-year to RMB 8.71 billion (USD 1.19 billion)[26]. - Net profit for 2024 is projected at RMB 7.11 billion (USD 974 million), with profit attributable to equity holders of RMB 6.64 billion (USD 910 million)[29]. - Non-IFRS net profit for 2024 is expected to be RMB 8.14 billion (USD 1.12 billion), with basic and diluted earnings per ADS of RMB 4.97 (USD 0.68) and RMB 4.90 (USD 0.67) respectively[29]. Revenue Breakdown - Online music subscription revenue increased by 18.0% year-over-year to RMB 4.03 billion (USD 552 million), with paid user count rising by 13.4% to 121 million[9]. - Online music service revenue grew 16.1% year-over-year to RMB 5.83 billion (USD 799 million), driven by a strong increase in subscription revenue and advertising service revenue[19]. - Online music service revenue increased by 25.5% year-over-year to RMB 21.74 billion (USD 2.98 billion), driven by strong growth in subscription and advertising revenues[7]. - Online music subscription revenue reached RMB 15.23 billion (USD 2.09 billion), a 25.9% increase from RMB 12.10 billion in 2023, supported by a growing user base and higher average revenue per paid user[7]. User Metrics - Monthly active users for online music services decreased by 3.5% year-over-year to 556 million, while mobile monthly active users for social entertainment services fell by 21.2% to 82 million[11]. - The number of online music paying users increased by 13.4% year-over-year to 121 million, benefiting from high-quality content and attractive membership benefits[19]. - The super member business showed strong performance with increased user engagement and average revenue per paid user[10]. - Average revenue per paid user for online music services increased by 3.7% year-over-year to RMB 11.1[11]. Cash and Investments - Cash and cash equivalents, along with short-term investments, totaled RMB 37.58 billion (USD 5.15 billion) as of December 31, 2024[9]. - Cash and cash equivalents totaled RMB 37.58 billion (USD 5.15 billion) as of December 31, 2024, up from RMB 36.04 billion as of September 30, 2024[22]. - The company reported a net cash outflow from investment activities of RMB 6,818 million in 2024, compared to RMB 1,863 million in 2023, indicating a significant increase in investment spending[50]. Dividends and Share Repurchase - The company announced a cash dividend of approximately USD 273 million for the fiscal year 2024 and a new share repurchase plan of up to USD 1 billion[12]. - A cash dividend of USD 0.09 per ordinary share or USD 0.18 per ADS is declared for the 2024 fiscal year, totaling approximately USD 273 million[31]. - The company announced a new share repurchase plan allowing for the buyback of up to USD 1 billion of Class A ordinary shares over a 24-month period starting March 2025[30]. Cost Management - Operating expenses decreased by 7.3% year-over-year to RMB 1.17 billion (USD 161 million), with operating expenses as a percentage of total revenue declining from 18.4% to 15.7%[20]. - Sales and marketing expenses decreased by 3.6% year-over-year to RMB 865 million (USD 119 million), while general and administrative expenses fell by 7.5% to RMB 3.81 billion (USD 522 million) due to reduced personnel costs[28]. Strategic Initiatives - The company plans to leverage AI to enhance personalized services and provide users with fresh music experiences in 2025[10]. - The company has made significant progress in supporting female musicians, with 192,000 women musicians being nurtured within a more diverse and inclusive music community[32]. Asset and Liability Overview - Total assets increased from RMB 75,536 million in 2023 to RMB 90,444 million in 2024, representing a growth of 19.7%[48]. - Total equity increased from RMB 57,202 million in 2023 to RMB 69,726 million in 2024, a growth of 22%[49]. - The company’s total liabilities rose from RMB 18,334 million in 2023 to RMB 20,718 million in 2024, an increase of 13%[49].

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME) with a target price of 13.75 USD per ADS, equivalent to 53.45 HKD per share [5][54]. Core Views - Tencent Music's Q3 2024 total revenue reached 70.15 billion RMB, showing a year-over-year increase of 7% and a quarter-over-quarter decrease of 2%, slightly above consensus expectations of 70 billion RMB. The Non-GAAP net profit was 18.14 billion RMB, up 29% YoY but down 3% QoQ, with a Non-GAAP net profit margin of 25.9% [2][11]. - The online music business continues to grow steadily, with Q3 2024 revenue of 54.8 billion RMB, a 20% increase YoY and a 1% increase QoQ. Subscription revenue contributed 38.4 billion RMB, also up 20% YoY and 3% QoQ [3][21]. - The company aims to increase its SVIP membership to over 10 million and enhance the Average Revenue Per User (ARPU) value, which is projected to rise to 11 RMB in Q4 2024 [3][45]. Summary by Sections Financial Performance - Q3 2024 total revenue: 70.15 billion RMB, YoY +7%, QoQ -2% [2][11] - Non-GAAP net profit: 18.14 billion RMB, YoY +29%, QoQ -3% [2][11] - Non-GAAP net profit margin: 25.9%, YoY +4.4 percentage points, QoQ -0.3 percentage points [2][11] - Q3 2024 gross margin: 42.6%, slightly above consensus of 42.4%, YoY +7 percentage points, QoQ +0.6 percentage points [3][37]. Business Segments - Online music revenue in Q3 2024: 54.8 billion RMB, YoY +20%, QoQ +1% [3][21] - Subscription revenue: 38.4 billion RMB, YoY +20%, QoQ +3% [3][21] - Non-subscription revenue: 16.4 billion RMB, YoY +20%, QoQ -2% [3][21] - Social entertainment revenue: 15.35 billion RMB, YoY -24%, QoQ -12%, but showing signs of stabilization [34]. Future Projections - Q4 2024 revenue expected to be 73 billion RMB, YoY +6%, with Non-GAAP net profit projected at 20 billion RMB, YoY +29% [3][45]. - Long-term revenue projections for 2024-2025: 282 billion RMB and 311 billion RMB, with growth rates of 1.7% and 10.3% respectively [3][45]. - Expected Non-GAAP net profit for 2024-2025: 74.23 billion RMB and 88.84 billion RMB, with growth rates of 25.3% and 19.7% respectively [3][45].

Investment Rating - The report maintains a "Buy" rating for Tencent Music [4] Core Views - In Q3 2024, Tencent Music reported revenue of 7.02 billion RMB, a year-on-year increase of 6.8% and a quarter-on-quarter decrease of 2.0%. The gross margin improved to 42.6%, up 7.0 percentage points year-on-year and 0.6 percentage points quarter-on-quarter, driven by strong growth in music subscription and advertising service revenues, as well as an increase in original content [1][2] - The online music service revenue reached 5.48 billion RMB in Q3 2024, reflecting a year-on-year growth of 20.4% and a quarter-on-quarter increase of 1.0%. The growth was attributed to high-quality content, attractive membership benefits, optimized user operations, and effective promotional measures. The report anticipates continued revenue growth in Q4, projecting it to reach 5.7 billion RMB [2] - The social entertainment service revenue was 1.54 billion RMB in Q3 2024, showing a decline of 23.9% year-on-year and 11.6% quarter-on-quarter, primarily due to adjustments in live interaction features and increased competition from other platforms [2] Financial Summary - The report forecasts the net profit attributable to the parent company for 2024, 2025, and 2026 to be 6.4 billion RMB, 7.9 billion RMB, and 9.5 billion RMB respectively. The previous estimates were 6.7 billion RMB, 8.2 billion RMB, and 10.2 billion RMB, adjusted due to lower gross margin and interest income [3] - The report sets a target price of 56.37 HKD (52.17 RMB) for Tencent Music, based on a P/E ratio of 28 times for 2024 [3]