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]

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [2] Core Insights - The company reported Q3 2024 revenue of 7.02 billion RMB, a year-over-year increase of 6.8%, slightly above Bloomberg consensus of 7.00 billion RMB. Gross profit reached 2.99 billion RMB, up 27.7% year-over-year, with a gross margin of 42.6%, benefiting from strong growth in music subscription revenue and rapid growth in advertising revenue [1] - Adjusted net profit for Q3 2024 was 1.94 billion RMB, a 29.1% increase year-over-year, also exceeding Bloomberg consensus of 1.92 billion RMB [1] - The company repurchased approximately 421 million American Depositary Shares for about 335.5 million USD from the open market [1] Summary by Sections Revenue Breakdown - Online music revenue was 5.48 billion RMB, a year-over-year increase of 20.4%, accounting for 78.1% of total revenue, up 8.8 percentage points year-over-year [1] - Subscription revenue reached 3.84 billion RMB, a 20.3% year-over-year increase, with paid user count at 119 million, adding 2 million users quarter-over-quarter, and a year-over-year growth in payment rate of 3.3 percentage points to 20.7% [1] - The average revenue per paying user (ARPPU) for subscriptions was 10.8 RMB, up 4.9% year-over-year, driven by reduced discounts and SVIP offerings [1] - Social entertainment revenue was 1.535 billion RMB, down 23.9% year-over-year, but the decline was mitigated by improvements in KuGou Live and strong performance in advertising and VIP subscription services [1] Profitability and Cost Management - Operating profit for Q3 2024 was 2.144 billion RMB, a 50.5% increase year-over-year [1] - Operating costs decreased by 4.8% year-over-year to 4.024 billion RMB, with music content cost growth slower than revenue growth [1] - Total expenses fell by 3.9% year-over-year to 1.22 billion RMB, with management expenses down 4.9% to 999.8 million RMB due to reduced personnel costs [1] Future Outlook - The SVIP subscription count has surpassed 10 million, with expectations for continued growth through diversified privileges enhancing user experience [1] - The company maintains a solid competitive barrier, with steady growth in subscription users and anticipated ARPPU uplift from SVIP development [1] - Adjusted net profit forecasts for 2024-2026 are maintained at 7.4 billion, 8.4 billion, and 9.4 billion RMB respectively [1]

Investment Rating - The report maintains an "Outperform" rating for Tencent Music (TME.N) [1][4][3] Core Insights - The online music business is experiencing robust growth, with a significant increase in subscription users and revenue [3][12] - The company achieved total revenue of 70.2 billion yuan in Q3 2024, representing a year-on-year increase of 6.8% [1][7] - The adjusted net profit for Q3 2024 reached 19.4 billion yuan, up 29.1% year-on-year, with an adjusted profit margin of 27.7% [1][7] - The number of SVIP members has surpassed 10 million, contributing positively to the subscription business [2][12] Summary by Sections Revenue and Profitability - Total revenue for Q3 2024 was 70.2 billion yuan, with online music revenue accounting for 78% of this total [1][7] - Online music revenue grew by 20.4% year-on-year, reaching 54.8 billion yuan in Q3 2024 [2][10] - The gross margin for Q3 2024 was 42.6%, an increase of 7.0 percentage points year-on-year [1][7] Subscription Business - The subscription user base increased by 2 million quarter-on-quarter, with a total of 1.19 billion paid users, reflecting a 16% year-on-year growth [2][12] - The average revenue per paying user (ARPPU) for subscriptions was 10.8 yuan, up 4.9% year-on-year [2][12] - The company expects the subscription user growth to continue at a similar pace into 2025 [3][12] Cost Management and Profit Forecast - The report highlights effective cost control, leading to an upward revision of profit expectations for 2024-2026, with adjusted net profits projected at 78 billion, 89 billion, and 90 billion yuan respectively [4][3] - The management fee ratio has room for optimization, contributing to improved profitability [1][7] Market Position and Future Outlook - Tencent Music's leading position in the market is expected to support the continued growth of its subscription business, particularly through the SVIP strategy [3][12] - The company anticipates that the SVIP user base could reach 20-30 million, which would further enhance ARPPU contributions [3][12]

Core Viewpoint - Tencent Music Entertainment Group (TME) has experienced a 12% decline in stock price over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround as analysts expect better earnings than previously predicted [1]. Group 1: Stock Performance - TME's stock has faced significant selling pressure, leading to a 12% decline in the last month [1]. - The stock is currently considered oversold, indicated by an RSI reading of 29.31, suggesting that selling may be exhausting [3]. Group 2: Analyst Sentiment - There is strong consensus among sell-side analysts to raise earnings estimates for TME, with a 1.6% increase in the consensus EPS estimate over the last 30 days [4]. - TME holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [4]. Group 3: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold conditions, with a reading below 30 typically indicating a stock is oversold [2]. - The RSI helps investors identify potential entry points for stocks that may rebound after unwarranted selling pressure [2].

Investment Rating - The investment rating for Tencent Music (TME) is currently not specified in the report, but the overall recommendation is to actively monitor the company due to its strong performance and growth potential [2]. Core Views - The report highlights that Tencent Music's Q3 2024 performance met expectations, with total revenue of 70.2 billion yuan, a year-over-year increase of 6.8%. Net profit reached 17.1 billion yuan, up 35.3% year-over-year, while adjusted net profit was 19.4 billion yuan, reflecting a 29.1% increase year-over-year [2]. - The online music service revenue was 54.8 billion yuan, showing a year-over-year growth of 20.4%, driven by strong growth in subscription revenue and advertising services. The subscription revenue alone was 38.4 billion yuan, up 20.3% year-over-year [2]. - The report emphasizes the importance of SVIP membership in enhancing ARPPU (Average Revenue Per Paying User), with SVIP members exceeding 10 million by the end of September 2024, contributing to a higher ARPPU compared to regular members [2]. Summary by Sections Financial Performance - Total revenue for Q3 2024 was 70.2 billion yuan, slightly above the consensus estimate of 70 billion yuan, with a year-over-year growth of 6.8% [2]. - Net profit was reported at 17.1 billion yuan, close to the consensus estimate of 17.2 billion yuan, with a year-over-year increase of 35.3% [2]. - Adjusted net profit reached 19.4 billion yuan, exceeding the consensus estimate of 19.2 billion yuan, marking a year-over-year growth of 29.1% [2]. Revenue Breakdown - Online music service revenue was 54.8 billion yuan, up 20.4% year-over-year, primarily due to strong subscription growth and advertising revenue [2]. - Subscription revenue specifically was 38.4 billion yuan, reflecting a year-over-year increase of 20.3% [2]. - Social entertainment services and other services revenue was 15.4 billion yuan, down 23.9% year-over-year, attributed to adjustments in live interaction features and stricter compliance measures [2]. User Metrics - As of Q3 2024, the number of paying users for online music services reached 119 million, a year-over-year increase of 15.5% [2]. - The report notes a net increase of 2 million paying users in Q3, aligning with the guidance of 1.5 to 2 million [2]. - The ARPPU for online music services was 10.8 yuan, up 4.9% year-over-year, while for social entertainment services, it was 64.8 yuan, down 24.8% year-over-year [2].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of $16.00 based on discounted cash flow (DCF) valuation methods [11][19]. Core Insights - The company reported a total revenue of RMB 7.02 billion for Q3 2024, a year-on-year increase of 7%, aligning with consensus expectations. Non-IFRS net profit grew by 29% to RMB 1.81 billion, also meeting expectations [1][2]. - The SVIP subscription service has reached a milestone of 10 million users, which is expected to drive future growth in music ARPPU (average revenue per paying user) and overall revenue [1][4]. - Online music revenue increased by 20% year-on-year to RMB 5.48 billion, supported by robust growth in both subscription and non-subscription revenues [1][4]. Revenue Summary - Total revenue for FY24E is projected to be RMB 28.25 billion, with a forecasted growth of 6% for Q4 2024, reaching RMB 7.31 billion [4][10]. - The online music segment is expected to see a 15% increase in revenue for Q4 2024, while social entertainment revenue is anticipated to decline by 17% [4][10]. Profitability Metrics - The gross profit margin (GPM) for Q3 2024 was reported at 42.6%, a year-on-year increase of 6.9 percentage points, attributed to strong growth in music ARPPU and advertising revenue [2][10]. - The non-IFRS net profit margin for Q3 2024 expanded to 25.9%, up 4.4 percentage points year-on-year [2][10]. User Growth and Engagement - The number of paying users increased by 2 million quarter-on-quarter to 119 million, representing a 16% year-on-year growth [1][4]. - The monthly ARPPU for Q3 2024 was RMB 10.8, reflecting a 4% year-on-year increase [1][4]. Financial Forecasts - For FY25E, the company expects further expansion in profit margins, with GPM projected to reach 44.5% and non-IFRS net profit margin at 28.2% [10][12]. - The adjusted net profit for FY25E is forecasted to be RMB 8.79 billion, with a continued focus on balanced growth in music subscription users and ARPPU [10][12]. Market Performance - The company's market capitalization is approximately $17.8 billion, with a 52-week high of $15.49 and a low of $7.43 [5][6]. - The stock has underperformed in the short term, with a 1-month decline of 9.6% and a 6-month decline of 13.4% [6][6].

Investment Rating - The report maintains a "BUY" rating for the company with a target price of US$16.00, indicating a potential upside of 38.5% from the current price of US$11.55 [3][7]. Core Insights - The company reported inline 3Q24 results with total revenue increasing by 7% YoY to RMB7.02 billion and non-IFRS net income growing by 29% YoY to RMB1.81 billion, both in line with estimates [1]. - The number of SVIP subscribers reached 10 million in September 2024, expected to drive future growth in music ARPPU and revenue [1]. - For FY25E, management anticipates accelerated revenue growth and margin improvement, supported by balanced growth in music subscribers and ARPPU [1]. Revenue and Profitability - Total revenue for FY24E is projected at RMB28.254 billion, with a growth forecast of 10.4% for FY25E to RMB31.193 billion and 10.2% for FY26E to RMB34.364 billion [2][4]. - Gross margin is expected to improve from 42.3% in FY24E to 44.5% in FY25E and 45.5% in FY26E, reflecting strong operating leverage and optimized content costs [4][12]. - Non-IFRS net profit is forecasted to grow from RMB7.332 billion in FY24E to RMB8.785 billion in FY25E and RMB10.297 billion in FY26E [2][4]. Online Music Business Performance - Online music revenue increased by 20% YoY to RMB5.48 billion in 3Q24, driven by both subscription and non-subscription revenue growth [1]. - The number of paid users rose by 2 million QoQ to 119 million in 3Q24, with monthly ARPPU increasing by 4% YoY to RMB10.8 [1][6]. - Advertising revenue showed strong growth in 3Q24, supported by ad-supported models and interactive ads [1]. Future Outlook - For 4Q24E, total revenue is expected to rise by 6% YoY to RMB7.31 billion, with online music revenue projected to grow by 15% YoY [1]. - The company plans to control promotion discounts for music subscriptions and drive further SVIP adoption, which is anticipated to support balanced growth in subscribers and ARPPU in FY25E [1]. - Management expects further margin expansion in FY25E, with gross margin projected to reach 43.3% and non-IFRS net margin at 27.0% [1][4].

Financial Data and Key Metrics - The company announced its quarterly financial results before the U.S. market opened, and the earnings release is available on the IR website and via Newswire services [1] Business Line Data and Key Metrics - No specific data or metrics related to individual business lines were provided in the content Market Data and Key Metrics - No specific data or metrics related to individual markets were provided in the content Company Strategy and Industry Competition - The Executive Chairman and CEO will provide an overview of the company's strategies and business updates during the call [2] Management Commentary on Operating Environment and Future Outlook - No specific commentary on the operating environment or future outlook was provided in the content Other Important Information - The call includes forward-looking statements, and non-IFRS measures will be discussed, with explanations and reconciliations provided in the earnings release and SEC filings [3] - The call is being recorded, and participants are currently muted [4] Q&A Session Summary - No Q&A session details were provided in the content

Core Viewpoint - Investors in the Internet - Content sector should consider Tencent Music Entertainment Group (TME) and TechTarget (TTGT) for potential value opportunities, with TME currently presenting a more attractive option [1]. Valuation Metrics - TME has a forward P/E ratio of 17.32, while TTGT has a forward P/E of 18.32, indicating TME may be undervalued compared to TTGT [5]. - TME's PEG ratio is 0.80, suggesting a favorable growth outlook, whereas TTGT's PEG ratio is significantly higher at 10.29 [5]. - TME's P/B ratio stands at 2.34, compared to TTGT's P/B of 3.57, further supporting TME's valuation attractiveness [6]. Earnings Estimates - TME holds a Zacks Rank of 2 (Buy), reflecting positive revisions in earnings estimates, while TTGT has a Zacks Rank of 3 (Hold), indicating a less favorable earnings outlook [3][7]. - The stronger estimate revision activity for TME suggests a more promising earnings trajectory compared to TTGT [7]. Value Grades - TME has a Value grade of B, while TTGT has a Value grade of D, highlighting TME's superior valuation metrics and overall investment appeal [6][7].

Shares of Tencent Music Entertainment Group Sponsored ADR (TME) have gained 2.8% over the past four weeks to close the last trading session at $11.59, but there could still be a solid upside left in the stock if shortterm price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $14.70 indicates a potential upside of 26.8%. The average comprises 15 short-term price targets ranging from a low of $10.50 to a high of $18, with a standard deviation of $2.01. Whil ...