Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [5] Core Insights - The company reported Q4 2024 revenue of 7.46 billion RMB, exceeding Bloomberg consensus expectations of 7.29 billion RMB, with a year-over-year growth of 8.2% [1] - The adjusted net profit for Q4 2024 reached 2.4 billion RMB, reflecting a year-over-year increase of 43.0% [1] - The music subscription business showed high-quality growth, with online music revenue of 5.83 billion RMB, up 16.1% year-over-year, driven by strong subscription and advertising revenue [2] Summary by Sections Financial Performance - Q4 2024 gross profit was 3.25 billion RMB, with a gross margin of 43.6%, up 5.3 percentage points year-over-year [3] - The company announced a cash dividend of 273 million USD and a new buyback plan of 1 billion USD [1] Revenue Breakdown - Membership subscription revenue reached 4.03 billion RMB, growing 18.0% year-over-year, with a total of 121 million paying users [2] - Social entertainment revenue was 1.63 billion RMB, down 13.0% year-over-year, but showed signs of stabilization [2] Profitability and Cost Management - Operating profit for Q4 2024 was 2.41 billion RMB, a 40.5% increase year-over-year [3] - Operating expenses decreased by 7.3% year-over-year to 1.17 billion RMB, primarily due to reduced personnel costs [3] Future Outlook - The company expects revenue growth to improve in 2025, with adjusted net profit forecasts raised to 8.98 billion RMB for 2025 and 10.44 billion RMB for 2026 [3] - The report highlights the solid competitive barriers and potential for profit release due to scale effects [3]

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME US) with a target price raised to $17.00, indicating a potential upside of 12.7% from the current price of $15.09 [2][16]. Core Insights - The report highlights that Tencent Music's Q4 profits exceeded expectations, with a revenue of 74.6 billion RMB, aligning with market forecasts. The growth in music subscription revenue was robust, with a year-on-year increase of 18% and a total of 121 million music members, reflecting a net increase of 2 million members quarter-on-quarter [6][11]. - The adjusted net profit for Q4 was 22.8 billion RMB, a 45% year-on-year increase, surpassing market expectations by 18%, primarily due to improved gross margins [6][11]. - The long-term targets for online music remain unchanged, aiming for 150 million members with an average revenue per paying user (ARPPU) of 15 RMB [2][6]. Financial Forecasts - Revenue projections for 2025 are set at 30,930 million RMB, reflecting a 1% increase from previous estimates. The online music segment is expected to generate 25,313 million RMB, a 2% increase [3][12]. - The adjusted operating profit for 2025 is forecasted to be 9,845 million RMB, an 8% increase from prior estimates, with an adjusted operating profit margin of 31.8% [3][12]. - The adjusted net profit for 2025 is projected at 8,611 million RMB, a 5% increase from previous forecasts, with an adjusted net profit margin of 27.8% [3][12]. Share Performance - The stock has shown a year-to-date increase of 32.95%, with a 52-week high of $15.49 and a low of $9.46, indicating strong market performance [5][6]. Membership and Revenue Growth - The report notes that the monthly ARPPU for music subscriptions increased to 11.1 RMB, with a year-on-year growth of 4% and a quarter-on-quarter growth of 3% [6][11]. - Non-member revenue also saw a year-on-year increase of 12%, driven by diversified advertising [6][11]. Shareholder Returns - Tencent Music has announced a new $1 billion share repurchase plan and continues to maintain a dividend payout ratio of 26%, with a dividend yield of 1.2% [2][6].

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [5] Core Insights - The company reported Q4 2024 revenue of 7.46 billion RMB, exceeding Bloomberg consensus expectations of 7.29 billion RMB, with a year-over-year growth of 8.2% [1] - The adjusted net profit for Q4 2024 reached 2.40 billion RMB, representing a year-over-year increase of 43.0% [1] - The music subscription business showed high-quality growth, with online music revenue of 5.83 billion RMB, up 16.1% year-over-year, driven by strong growth in subscription and advertising revenues [2] - The company announced a cash dividend of 273 million USD and a new share buyback plan amounting to 1 billion USD [1] Summary by Sections Financial Performance - Q4 2024 gross profit was 3.25 billion RMB, with a gross margin of 43.6%, up 5.3 percentage points year-over-year [3] - Operating profit for Q4 2024 reached 2.41 billion RMB, a year-over-year increase of 40.5% [3] - The company expects revenue growth to improve in 2025, with a slight increase in operating expenses anticipated [3] Revenue Breakdown - Membership subscription revenue was 4.03 billion RMB, up 18.0% year-over-year, with a total of 121 million paying users [2] - Other music revenue reached 1.80 billion RMB, growing 12.5% year-over-year, supported by healthy advertising revenue [2] - Social entertainment revenue was 1.63 billion RMB, down 13.0% year-over-year, but showing signs of stabilization [2] Profitability Forecast - The adjusted net profit forecast for 2025 is set at 8.98 billion RMB, reflecting a growth rate of 17.0% [4] - The report projects a gradual increase in adjusted net profit for 2026 and 2027, with estimates of 10.44 billion RMB and 11.72 billion RMB respectively [4] Market Position - The company has solid competitive barriers, with expectations that SVIP development will enhance ARPPU and contribute to advertising revenue growth [3] - The report highlights the potential for continued profit release due to scale effects [3]

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME US) with a target price raised to $17.00, indicating a potential upside of 12.7% from the current price of $15.09 [2][16]. Core Insights - The report highlights that Tencent Music's Q4 profits exceeded expectations, with a 45% year-on-year increase in adjusted net profit to 22.8 billion RMB, driven by improved gross margins [2][6]. - The company continues to see robust growth in its music subscription revenue, with a target of 150 million members and an average revenue per paying user (ARPPU) of 15 RMB remaining unchanged [2][6]. - A new $1 billion share buyback plan has been announced, alongside a maintained dividend payout ratio of 26% and a dividend yield of 1.2% [2][6]. Financial Forecasts - Revenue projections for 2025 have been adjusted to 30,930 million RMB, reflecting a 1% increase from previous estimates [3]. - Online music revenue is expected to reach 25,313 million RMB in 2025, a 2% increase, with subscription revenue projected at 17,608 million RMB, also up by 1% [3]. - The adjusted net profit forecast for 2025 is now 8,611 million RMB, a 5% increase from prior estimates [3]. Performance Metrics - The report notes a significant improvement in gross margin, which is expected to rise to 45.2% in 2025, up from 43.8% [3]. - The adjusted operating profit margin is projected to increase to 31.8% in 2025, compared to 29.8% previously [3]. - The company’s stock has shown a year-to-date increase of 32.95% [5]. Market Position - Tencent Music's market capitalization is approximately $10.56 billion, with a 52-week high of $15.49 and a low of $9.46 [5][6]. - The report emphasizes the competitive landscape, noting that while social entertainment revenue may decline, online music and advertising revenues are expected to grow [2][6].

Financial Data and Key Metrics Changes - In Q4 2024, total revenues reached RMB7.5 billion, an 8% year-over-year increase, with online music revenues growing by 16% to RMB5.8 billion [32][34] - Average net profit increased by 47% year-over-year to RMB2.1 billion, marking the highest quarterly profit in the company's history [32][40] - Non-IFRS net profit rose by 43% year-over-year to RMB2.4 billion [40] - Gross margin for Q4 reached 43.6%, up by 5.3 percentage points year-over-year [36][58] Business Line Data and Key Metrics Changes - Music subscription revenues in Q4 2024 reached RMB4 billion, representing an 18% increase year-over-year [33] - The number of online music paying users was 121 million, a 13% increase year-over-year [34] - Advertising revenues achieved strong year-over-year growth, primarily due to the growth in ad-supported model revenues [34] Market Data and Key Metrics Changes - The music and audio library exceeded 260 million licensed and co-created tracks by the end of 2024, up from 200 million at the end of the previous year [8] - The company has renewed strategic contracts with international labels, expanding its coverage of high-quality music content [9] Company Strategy and Development Direction - The company is focused on a dual-engine strategy combining rich content and platform innovation to capture emerging opportunities [7] - Plans to continue diversifying offerings across the music value chain and investing in original content production and innovative technologies [47][48] - The company aims to enhance user experiences through AI technologies and innovative features [30][90] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, supported by a strong performance in online music services and profit margin expansion [5][7] - The company anticipates healthy growth in online music driven by an increase in paying users and ARPPU [57] - Management noted that the willingness of users to spend on live music events has surged, indicating a positive cycle for music content consumption [80] Other Important Information - The company announced an annual dividend of $273 million and a new share repurchase program of up to $1 billion [7][42] - The commitment to ESG excellence is emphasized, with significant strides made in supporting female musicians [15][16] Q&A Session Summary Question: Guidance on 2025 growth outlook, especially for music subscription revenue - Management highlighted strong performance in 2024 and expressed optimism for continued growth in 2025, focusing on user experience and service innovation [50][56] Question: Balance between subscriber and ARPU growth - Management confirmed confidence in revenue and profit growth for 2025, with expectations for continued growth in both subscriber numbers and ARPPU [67][70] Question: Changes in consumer sentiment towards discretionary spending - Management observed a shift towards live music experiences, with increased willingness to spend on concerts and merchandise [78][80] Question: Strategy around AI for 2025 - Management plans to leverage AI technologies to enhance user experience and engagement, with ongoing investments in AI capabilities [84][90] Question: Sequential revenue growth for social entertainment - Management noted a key growth driver from new interactive features and a stabilized user base, with expectations for continued growth momentum [93][100] Question: Capital allocation and shareholder returns - Management emphasized a balanced approach to capital allocation, focusing on sustainable growth opportunities while returning value to shareholders through dividends and share repurchase programs [103][106]

Core Viewpoint - Tencent Music Entertainment Group (TME) reported strong financial results for Q4 and full year 2024, highlighting significant growth in online music services and a commitment to shareholder value through dividends and share repurchase programs [1][3]. Financial Highlights - Total revenues for Q4 2024 increased by RMB 565 million, or 8.2%, to RMB 7.46 billion (US$1.02 billion) compared to RMB 6.89 billion in Q4 2023 [5][6]. - Revenues from online music services rose by 16.1% year-over-year to RMB 5.83 billion (US$799 million) from RMB 5.02 billion in the same period of 2023 [5][6]. - For the full year 2024, total revenues reached RMB 28.40 billion (US$3.89 billion), a 2.3% increase from RMB 27.75 billion in 2023 [15][19]. - Net profit for Q4 2024 was RMB 2.08 billion (US$284 million), representing a 47.3% year-over-year growth [6][12]. - The company declared an annual cash dividend of approximately US$273 million for 2024 and authorized a new share repurchase program of up to US$1 billion [3][21]. Operational Highlights - Monthly Active Users (MAUs) for online music decreased by 3.5% year-over-year to 556 million, while paying users for online music increased by 13.4% to 121 million [4][8]. - Monthly Average Revenue Per Paying User (ARPPU) for online music rose to RMB 11.1 from RMB 10.7 in Q4 2023 [4][8]. - Revenues from music subscriptions grew by 18.0% year-over-year to RMB 4.03 billion (US$552 million) [6][8]. Cost and Profitability - Gross margin improved to 43.6% in Q4 2024 from 38.3% in the same period of 2023, driven by growth in music subscription revenues and advertising services [9]. - Total operating expenses decreased by 7.3% year-over-year to RMB 1.17 billion (US$161 million) [9][17]. - Total operating profit for Q4 2024 was RMB 2.41 billion (US$330 million), a 40.5% increase year-over-year [10][18]. Strategic Initiatives - The company emphasized innovation in user experience and content offerings, launching new features to enhance user engagement [3][5]. - TME's SVIP initiative showed strong performance, contributing to user engagement and ARPPU growth [3][7]. - The company is focusing on AI integration to personalize services and enhance user experiences in 2025 [3][7]. Content and Partnerships - TME has over 260 million licensed and co-created music and audio tracks, with renewed contracts with major entertainment companies [7]. - Collaborations with renowned artists and production of original soundtracks for popular media have expanded TME's content ecosystem [7]. ESG Commitment - The company has made strides in supporting female musicians and launched initiatives to raise biodiversity awareness through music [25].

Core Points - Tencent Music Entertainment Group (TME) announced the retirement of Mr. Matthew Yun Ming Cheng from its Board of Directors effective February 28, 2025, and appointed Mr. Wai Yip Tsang as a new director on the same date [1][2] - Mr. Cheng has been a member of TME's Board since 2022, contributing to the company's growth and innovation in the music industry [2] - Mr. Tsang brings a strong financial background and extensive experience in corporate finance, having held senior financial positions in various companies and currently serving as the Financial Controller of Tencent Holdings Limited [2] Company Overview - Tencent Music Entertainment Group is the leading online music and audio entertainment platform in China, operating popular music apps such as QQ Music, Kugou Music, Kuwo Music, and WeSing [3] - The company's mission is to create endless possibilities with music and technology, offering services that include online music, online audio, online karaoke, music-centric live streaming, and online concert services [3]

Core Viewpoint - Tencent Music Entertainment Group (TME) is set to report its unaudited financial results for Q4 and the full year of 2024 on March 18, 2025, before the U.S. market opens [1]. Group 1: Financial Reporting - TME will announce its financial results for Q4 and the full year of 2024 on March 18, 2025 [1]. - The company will host a Tencent Meeting Webinar on the same day at 7:00 A.M. Eastern Time or 7:00 P.M. Beijing/Hong Kong Time to discuss its business and financial performance [2]. Group 2: Participation Details - Participants interested in joining the Tencent Meeting Webinar must complete online registration in advance [3]. - Upon registration, participants will receive an email with access information, including meeting ID, link, dial-in numbers, and a unique attendee ID [3]. Group 3: Company Overview - Tencent Music Entertainment Group is the leading online music and audio entertainment platform in China, operating popular music apps such as QQ Music, Kugou Music, Kuwo Music, and WeSing [4]. - The company's mission is to create endless possibilities with music and technology, offering services that include online music, audio, karaoke, live streaming, and online concerts [4].

Core Viewpoint - Tencent Music Entertainment Group (TME) is currently positioned as a more attractive investment compared to RELX PLC based on various valuation metrics and rankings [1][3][7]. Valuation Metrics - TME has a forward P/E ratio of 17.45, significantly lower than RELX's forward P/E of 30.93, indicating that TME may be undervalued [5]. - The PEG ratio for TME is 0.83, while RELX has a PEG ratio of 3.53, suggesting TME offers better value relative to its expected earnings growth [5]. - TME's P/B ratio stands at 2.34, compared to RELX's P/B of 20.74, further highlighting TME's relative undervaluation [6]. Zacks Rank and Style Scores - TME holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while RELX has a Zacks Rank of 4 (Sell), suggesting a less favorable earnings forecast [3]. - TME's Value grade is B, contrasting with RELX's Value grade of F, reinforcing the notion that TME is a more appealing option for value investors [7].

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.US) with a target price of $13.9, indicating a potential upside of 20.5% from the current price of $11.51 [2][5][15] Core Insights - The growth in super membership is expected to drive an increase in ARPU (Average Revenue Per User), with non-subscription revenue exceeding expectations. In Q3 2024, online music revenue reached 5.48 billion yuan, a year-on-year increase of 20.4% and a quarter-on-quarter increase of 1.0%. Subscription revenue also grew by 20% year-on-year, amounting to 3.8 billion yuan [3][8] - The company is exploring new avenues in the short drama sector, leveraging its strengths in the music field. Tencent Music is collaborating on a micro-drama titled "Debut, Sound Wave Youth," utilizing its extensive music copyright library and resources [4][14] Summary by Sections Online Music Business - In Q3 2024, Tencent Music's online music business generated revenue of 5.48 billion yuan, reflecting a 20.4% year-on-year growth and a 1.0% quarter-on-quarter growth. Subscription revenue was 3.8 billion yuan, also up 20% year-on-year and 2.7% quarter-on-quarter. The number of paid users increased to 119 million, a 15.5% year-on-year rise, with a payment rate of 20.7% [3][8][9] Social Entertainment Business - The social entertainment segment has faced challenges, with revenue declining by 24% year-on-year to 1.54 billion yuan in Q3 2024. The monthly ARPPU (Average Revenue Per Paying User) decreased by 25% year-on-year [10] Other Online Music Business - Other online music revenue, including advertising and digital album licensing, grew by 20% year-on-year to 1.64 billion yuan, although it saw a slight decline of 2.6% quarter-on-quarter [11][13] Future Growth Drivers - Future growth in online music subscription revenue is anticipated to be driven by the super membership program and stable growth in paid membership numbers. As of September, over 10 million super members were reported, contributing significantly to ARPU [9][10] Market Position - Tencent Music's market position remains strong, with a stable user base and significant monetization potential. The report highlights the company's efforts in cost reduction and efficiency improvements, alongside innovative business developments such as super memberships and short dramas [5][15]