14 Aug 2024 CMB 国际全球市场 | 股票研究 | 公司更新 TME (TME US) 内联第二季度业绩 ； 关注平衡增长 2H24E 中的音乐潜艇和 ARPPU US$16.00 TME 于 8 月 13 日宣布第二季度业绩 ： 总收入同比下降 2% 至 21.9% 71.6 亿元人民币 ， 符合我们 / 彭博社普遍估计的 71.6 / 71.3 亿元人民币 ； 非国际财务报告准则净收入同比增长 22% ， 达到 18.7 亿元人民币 ， 领先 2 / 2% 我们的 / 共识估计。对于 2H24E ， 管理层将更多地关注平衡 音乐潜艇和 ARPPU 的增长 ， 预计音乐用户网络会增加 但季度环比 ARPPU 持续增长 ， 这引发了一些投资者的担忧。 也就是说 ， 管理层重申了其长期目标 （ 1.5 亿音乐用户 & 每月 ARPPU 15 元人民币 ） 。我们对 TME 收益复合年增长率保持乐观 FY24 - 26E （ + 21% ） 受核心音乐收入增长和 GPM 扩张的推动。 我们维持 FY24 - 26 非国际财务报告准则净收入预测基本不变 ， 并且 将我们的 DCF 衍生 TP 维持在 1 ...

14 August 2024 | 6:40AM HKT Tencent Music Entertainment Group (tme) Buy Earnings Review: 2024 in-line: Shifting gear to ARPPU over subs, expectation reset but still long runway of growth; Buy TMEUpside: 27.7%12m Price Target: $14.20Price: $11.12 1698.HK12m Price Target: HK$55.10Price: HK$53.50Upside: 3.0% TME delivered in-line 2Q24 results (see our note) yet produced a mixed outlook over 2H24-2025 including: 1) A shift in gear of growth drivers may raise concerns for some investors on multiple contraction, ...

Investment Rating - The report maintains a "Buy" rating for Tencent Music Entertainment Group (TME) with a 12-month price target of US$16.00 per ADS and HK$62.30 for 1698.HK, indicating an upside potential of 21.9% [7][10]. Core Insights - Tencent Music reported 2Q24 revenue largely in line with expectations, showing a slight year-over-year decline of 2% but a significant increase in non-GAAP operating profit by 39% year-over-year [2][4]. - The company achieved a record high gross profit margin (GPM) of 42%, reflecting an 8 percentage point increase year-over-year, driven by operating leverage from online music services and subscriber growth [4][8]. - The number of paying subscribers increased by 3.5 million quarter-over-quarter, with an average revenue per paying user (ARPPU) of RMB 10.7, marking a 10% year-over-year improvement [4][8]. Financial Performance Summary - **Net Revenues**: RMB 7,160 million, down 2% year-over-year, and slightly below Goldman Sachs estimates [4]. - **Online Music Revenues**: RMB 5,424 million, up 28% year-over-year, indicating strong growth in this segment [4]. - **Adjusted Net Income**: RMB 1,873 million, a 22% increase year-over-year, slightly above estimates [4]. - **Gross Margin**: Increased to 42%, surpassing expectations, with a target of 45% in the medium term [4][8]. - **Operating Expenses**: Remained disciplined, with total OPEX largely flat quarter-over-quarter, reflecting a focus on cost management [4][8]. Subscriber and Revenue Metrics - **Total Subscribers**: 117 million, with a year-over-year growth of 18% [4]. - **ARPPU**: RMB 10.7, showing a 10% increase year-over-year [4]. - **Quarterly Subscriber Growth**: Sustained momentum with 3.5 million net adds [4][8]. Market Outlook - The management's outlook for 3Q growth in subscribers and ARPU, along with profitability expansion, will be critical to watch [2][4].

Investment Rating - The report maintains a "BUY" rating for the company with a target price of US$16.00, indicating a potential upside of 21.9% from the current price of US$13.13 [5][11]. Core Insights - The company reported inline 2Q24 results with total revenue declining by 2% YoY to RMB7.16 billion, while non-IFRS net income increased by 22% YoY to RMB1.87 billion, exceeding estimates [3][4]. - Management aims for balanced growth in music subscribers and ARPPU in 2H24E, with expectations of slower subscriber growth but continued ARPPU growth [3][4]. - The long-term target remains at 150 million music subscribers and RMB15 in monthly ARPPU, with a projected earnings CAGR of 21% over FY24-26E [3][4]. Revenue and Profitability - Online music revenue grew by 28% YoY to RMB5.42 billion in 2Q24, accounting for 76% of total revenue, with subscription and non-subscription revenues increasing by 29% and 24% YoY, respectively [3][4]. - The gross profit margin (GPM) expanded by 7.7 percentage points YoY to 42.0% in 2Q24, driven by margin improvements in the online music business and enhanced monetization strategies [3][4][10]. - For FY24E, non-IFRS net income is estimated to grow by 27% YoY to RMB7.50 billion, supported by GPM expansion and operational expense control [3][4]. Future Outlook - The company forecasts total revenue growth of 8% YoY to RMB7.06 billion in 3Q24E, primarily driven by a 24% YoY increase in online music revenue, despite a decline in social entertainment revenue [3][4]. - GPM is expected to further expand to 42.8% in 3Q24E, with continued focus on high-value programs and AI technology to enhance user experience [3][4][10]. - The company’s valuation remains fair at 21x FY24E PE, reflecting confidence in its growth trajectory [3][4].

14 Aug 2024 CMB International Global Markets | Equity Research | Company Update TME (TME US) Inline 2Q24 results; focus on balanced growth of music subs and ARPPU in 2H24E TME announced 2Q24 results on 13 Aug: total revenue declined by 2% YoY to RMB7.16bn, in line with our/Bloomberg consensus estimate of RMB7.16/7.13bn; non-IFRS net income was up by 22% YoY to RMB1.87bn, 2/2% ahead of our/consensus estimate. For 2H24E, management will focus more on balanced growth of music subs and ARPPU, expecting slower m ...

Financial Performance - Total revenues for Q2 2024 were RMB7.16 billion (US$985 million), a 1.7% year-over-year decrease, primarily due to a decline in social entertainment services revenues[1]. - Net profit for Q2 2024 was RMB1.79 billion (US$247 million), representing a 33.1% year-over-year growth[2]. - Total operating profit for Q2 2024 was RMB2.20 billion (US$302 million), a 42.8% year-over-year increase[13]. - The net profit attributable to equity holders for the period was RMB 1,682 million, reflecting a year-over-year increase of 29.6% from RMB 1,298 million[24]. - Tencent Music's non-IFRS net profit for the three months ended June 30, 2024, was RMB 1,985 million, up 25.0% from RMB 1,579 million in the same period of 2023[26]. - Basic earnings per share for Class A and Class B ordinary shares was RMB 0.54, compared to RMB 0.42 in the same quarter last year, marking a 28.6% increase[24]. Revenue Breakdown - Revenues from music subscriptions increased by 29.4% year-over-year to RMB3.74 billion (US$515 million), with paying users rising by 17.7% to 117.0 million[2]. - Revenues from online music services grew by 27.7% year-over-year to RMB5.42 billion (US$746 million)[10]. - Revenues from social entertainment services decreased by 42.8% to RMB1.74 billion (US$239 million) due to compliance adjustments and increased competition[11]. User Engagement and Growth - Monthly ARPPU for online music increased by 10.3% year-over-year to RMB10.7[4]. - The company launched new digital album offerings and enhanced user engagement through personalized privileges and advanced technology features[5][8]. - The company reported a total of 51.6 million monthly active users in its online music services segment as of June 30, 2024, a decrease from 45.6 million in the previous year[24]. Financial Position - Cash, cash equivalents, term deposits, and short-term investments totaled RMB35.03 billion (US$4.82 billion) as of June 30, 2024[15]. - The company has increased its financial assets at fair value through other comprehensive income to RMB 10,294 million as of June 30, 2024, from RMB 6,540 million at the end of 2023[28]. - Tencent Music's total assets grew to RMB 82,405 million as of June 30, 2024, compared to RMB 75,536 million at the end of 2023, indicating a growth of 9.8%[29]. - Total equity decreased from RMB 62,879 million to RMB 57,202 million, a decline of 9.7%[30]. - Total liabilities decreased from RMB 19,526 million to RMB 18,334 million, a decline of 6.1%[31]. Cash Flow - Net cash provided by operating activities increased from RMB 2,067 million to RMB 2,944 million, a growth of 42.4%[33]. - Net cash used in investing activities improved from a usage of RMB 1,339 million to a usage of RMB 693 million, a reduction of 48.3%[33]. - Cash and cash equivalents at the end of the period decreased from RMB 12,950 million to RMB 12,251 million, a decline of 5.4%[33]. Other Financial Metrics - Gross margin improved to 42.0%, up from 34.3% in the same period of 2023, driven by strong growth in music subscriptions and advertising[12]. - The gross profit for the same period was RMB 3,010 million, representing a gross margin of 42.0%, up from RMB 2,497 million and a gross margin of 34.3% in the prior year[24]. - Operating profit increased to RMB 2,198 million for the three months ended June 30, 2024, a growth of 43.0% year-over-year from RMB 1,539 million[24]. - Retained earnings increased from RMB 16,520 million to RMB 16,969 million, an increase of 2.7%[30]. - Non-controlling interests decreased from RMB 1,670 million to RMB 1,295 million, a decline of 22.4%[30]. - Current liabilities decreased from RMB 13,179 million to RMB 12,014 million, a decline of 8.8%[30]. - Total equity and liabilities decreased from RMB 82,405 million to RMB 75,536 million, a decline of 8.3%[31]. - Deferred revenue increased from RMB 2,952 million to RMB 2,854 million, a decline of 3.3%[30].

SHENZHEN, China, July 26, 2024 /PRNewswire/ -- Tencent Music Entertainment Group ("TME", or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today announced that Ms. Linlin Chen has tendered her resignation from her position as the Company's Group Vice President and other relevant roles for personal reasons, effective September 30, 2024. "On behalf of the Company, we would like to extend our gratitude to Ms. Chen for her dedicated service at TME. ...

SHENZHEN, China, July 12, 2024 /PRNewswire/ -- Tencent Music Entertainment Group ("TME", or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today announced that it will report its unaudited financial results for the second quarter of 2024 before the U.S. market opens on Tuesday, August 13, 2024. TME's management will host a Tencent Meeting Webinar on Tuesday, August 13, 2024, at 7:00 A.M. Eastern Time or 7:00 P.M. Beijing/Hong Kong Time on Tuesd ...

SHENZHEN, China, June 28, 2024 /PRNewswire/ -- Tencent Music Entertainment Group ("TME," or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today announced that its annual general meeting (the "AGM") was held in Hong Kong on June 28, 2024 and all the proposed resolutions set out in the notice of the AGM dated May 21, 2024 were duly passed at the AGM. About Tencent Music Entertainment Tencent Music Entertainment Group (NYSE: TME and HKEX: 1698) i ...

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [2][4] Core Views - The online music business is experiencing robust growth, with expectations for continued profit optimization in 2024 [2][10] - The company has a strong cash position, with cash and cash equivalents totaling 34.18 billion yuan as of March 2024, and has initiated a cash dividend distribution of 1.21 billion USD [2][10] - The adjusted net profit forecast for 2024-2026 has been raised, with expected figures of 7.462 billion, 8.586 billion, and 9.345 billion yuan respectively [2][10] Summary by Sections Financial Performance - In Q1 2024, Tencent Music reported total revenue of 6.77 billion yuan, a year-on-year decrease of 3.4% and a quarter-on-quarter decrease of 1.8% [5][6] - Online music revenue accounted for 74% of total revenue, with a significant year-on-year growth of 43% to 5.01 billion yuan [5][6] - The gross margin improved to 40.9%, up 7.9 percentage points year-on-year, driven by growth in subscription and advertising revenues, as well as improved returns on music copyright investments [5][6] User Growth and Subscription Business - The number of paid users for online music reached 114 million, a year-on-year increase of 20.2%, with a payment rate of 19.6%, up 3.7 percentage points [7][10] - The company is confident that the total net increase in subscriptions for 2024 will exceed previous forecasts, although it will be slightly lower than in 2023 due to base effect adjustments [7][10] Social Entertainment Business - The social entertainment and other revenue for Q1 2024 was 1.76 billion yuan, a year-on-year decline of 50% and a quarter-on-quarter decline of 6% [10] - The decline in social entertainment revenue is attributed to the company's proactive ecosystem adjustments, which resulted in a 55% year-on-year decrease in user ARPPU [10]