Core Viewpoint - Tencent Music Entertainment Group (TME) is set to hold its annual general meeting (AGM) on June 28, 2024, to consider resolutions supported by the Board of Directors [1][2] Group 1: AGM Details - The AGM will take place at The Hong Kong Club Building, Central, Hong Kong, at 10 a.m. on June 28, 2024 [1] - Shareholders and holders of American depositary shares (ADSs) are encouraged to vote in favor of the proposed resolutions [1] - The AGM Notice and proxy form are available on the Company's website as of May 21, 2024 [1] Group 2: Voting Rights - Holders of ordinary shares as of May 21, 2024, are entitled to attend and vote at the AGM [2] - ADS holders must provide voting instructions to The Bank of New York Mellon or through a securities intermediary to exercise their voting rights [2] Group 3: Financial Reporting - The Company has filed its annual report on Form 20-F for the fiscal year ended December 31, 2023, with the SEC [2] - The annual report, including audited financial statements, is accessible on the Company's and SEC's websites [2] Group 4: 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 like online music, audio, karaoke, live streaming, and online concerts [3]

Investment Rating - The report assigns a "Buy" rating for both A-shares and H-shares of Tencent Music (TME) [1][26]. Core Insights - The company reported stronger-than-expected growth in subscription members, leading to accelerated profit release [1][24]. - In Q1 2024, Tencent Music's revenue reached 6.768 billion RMB, slightly above the consensus estimate of 6.554 billion RMB, with a year-over-year decline of 3% and a quarter-over-quarter decline of 2% [2][8]. - The adjusted net profit for Q1 2024 was 1.7 billion RMB, representing a year-over-year increase of 21% and a quarter-over-quarter increase of 8%, exceeding the consensus estimate of 1.589 billion RMB [2][8]. Revenue and Profitability - Online music business revenue in Q1 2024 was 5.007 billion RMB, surpassing the consensus estimate of 4.847 billion RMB, with a year-over-year growth of 43% [1][8]. - The number of paid subscribers reached 113.5 million, exceeding the consensus estimate of 112.5 million, with a year-over-year growth of 20.2% [1][8]. - The gross margin for Q1 2024 was 40.9%, higher than the consensus estimate of 38.9%, reflecting a year-over-year increase of 7.9 percentage points [20][24]. Future Projections - Revenue is projected to grow to 28.7 billion RMB in 2024 and 32.8 billion RMB in 2025, with year-over-year growth rates of 4% and 14% respectively [24][25]. - The adjusted net profit for 2024 is expected to be 7.463 billion RMB, with a growth rate of 26% [25][26]. - The report anticipates that the number of paid subscribers will reach 123 million by the end of 2025, with a corresponding payment rate of 21.2% [24][25]. Valuation - The fair value of Tencent Music is estimated at 15.81 USD per ADS, equivalent to 61.74 HKD per share, based on a sum-of-the-parts valuation method [26][24]. - The valuation considers the online music business's expected growth and the stabilization of the social entertainment business [26][24].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a projected investment return exceeding 15% over the next 6-12 months [13]. Core Insights - The company reported strong growth in music subscriptions, with total revenue reaching 6.77 billion RMB, exceeding market expectations [2]. - The adjusted net profit for Q1 2024 was 1.81 billion RMB, reflecting a year-on-year increase of 23.9% [2]. - The company announced its first annual cash dividend, amounting to approximately 210 million USD for the fiscal year 2023 [2]. - The online music revenue was 5.01 billion RMB, a year-on-year increase of 43%, driven by a record net addition of 6.8 million subscription users in Q1 2024 [2]. - The company expects continued growth in Average Revenue Per Paying User (ARPPU), which reached 10.6 RMB, up 15.2% year-on-year [2]. Summary by Sections Financial Performance - Q1 2024 revenue was 6.77 billion RMB, a decrease of 3.4% year-on-year, but above Bloomberg consensus of 6.55 billion RMB [2]. - Gross margin improved to 40.9%, up 7.8 percentage points year-on-year, surpassing the expected 38.9% [2]. - Operating profit for Q1 2024 increased to 1.96 billion RMB, a year-on-year growth of 41.9% [2]. - The company expects revenue forecasts for 2024-2026 to be 28.8 billion, 31.2 billion, and 33.4 billion RMB respectively [2]. Business Segments - Online music revenue reached 5.01 billion RMB, with subscription revenue growing to 3.62 billion RMB, a 39% increase year-on-year [2]. - Social entertainment revenue was 1.76 billion RMB, down 49.7% year-on-year, although social paying users grew by 12.7% [2]. - Other music revenue reached 1.39 billion RMB, a 54.4% increase year-on-year, driven by innovative advertising strategies [2]. Strategic Initiatives - The company is leveraging AI tools to enhance user experience and retention, including the development of audio language models and music generation models [2]. - The company has established mutually beneficial partnerships with record labels and artists to improve content operation efficiency [2]. - Cost management strategies have led to a 7.6% reduction in operating expenses year-on-year, with marketing expenses expected to stabilize in 2024 [2].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is expected to see a continuous increase in paid music subscriptions and ARPU, leading to an improvement in profit margins. The net profit forecasts for 2024, 2025, and 2026 are projected to be 6.6 billion, 8 billion, and 9.4 billion CNY respectively, reflecting an upward revision due to increased membership and gross margin expectations [5] - The company reported Q1 2024 revenue of 6.77 billion CNY, a year-over-year decrease of 3.4% and a quarter-over-quarter decrease of 1.8%. The Q2 revenue is anticipated to reach 7.38 billion CNY, showing a year-over-year increase of 1.3% and a quarter-over-quarter increase of 9.1% [4][6] - The online music service revenue for Q1 2024 was 5.01 billion CNY, a year-over-year increase of 43.0%. The company expects Q2 revenue from this segment to be 5.67 billion CNY, a year-over-year increase of 33.5% [4][6] Financial Summary - Revenue for 2022 was 28,339 million CNY, with a projected increase to 29,449 million CNY in 2024, reflecting a year-over-year growth of 6.1% [4] - The gross profit margin is expected to improve from 35.3% in 2023 to 42.0% in 2024, while the net profit margin is projected to rise from 17.7% to 22.5% in the same period [4] - The company’s earnings per share (EPS) is forecasted to increase from 1.43 CNY in 2023 to 1.93 CNY in 2024 [4] Market Performance - The company's stock has shown strong performance with a 12-month absolute return of 107.72% and a relative performance of 110.54% compared to the Hang Seng Index [2]

Investment Rating - The investment rating for Tencent Music (TME US) is "Buy" with a target price of $17.00, indicating a potential upside of 14.9% from the current price of $14.80 [1][12]. Core Insights - Tencent Music's Q1 2024 performance exceeded expectations, with revenues of 6.8 billion RMB, driven by strong music business growth, despite a 50% decline in social entertainment revenue [2][3]. - The adjusted net profit for Q1 2024 was 1.8 billion RMB, a 24% year-on-year increase, surpassing market expectations [2][3]. - The company reported a record net increase of 6.8 million paid subscribers, bringing the total to 113.5 million, with a paid rate of 19.6% [2][3]. Financial Summary - Revenue for 2024 is projected to be 28.7 billion RMB, with a year-on-year growth of 3.4% [4]. - Adjusted net profit for 2024 is expected to reach 7.1 billion RMB, reflecting a 14.4% increase [4]. - The earnings per share (EPS) for 2024 is forecasted at 4.28 RMB, with a price-to-earnings (P/E) ratio of 25.0 [4]. Valuation - The valuation has been adjusted to a sum-of-the-parts (SOTP) approach, with the music segment valued at $15 based on a 25x P/E ratio, and the social segment at $1 based on a 5x P/E ratio [3][9]. - The total valuation for Tencent Music is estimated at $26.1 billion, with a target price of $17.00 [9]. Outlook - For Q2 2024, online music revenue is expected to grow by 30%, with a net increase of 3.7 million subscribers, raising the annual net subscriber growth forecast to 16.8 million [2][8]. - The company anticipates a 21% increase in non-member music revenue, driven by innovative advertising and strong performance in e-commerce and gaming sectors [2][8].

2024 年 5 月 14 日 CMB 国际全球市场 | 股票研究 | 公司更新 TME (TME US) 1Q24 得益于强劲的音乐业务增长和 GPM 扩张 目标价格(上一个 US $16.00 TME 公布了第 1 季度的业绩 ： 由于在线音乐收入强劲增长，总收入同比下降 3 ％，至 67.7 亿元 TP上行 / 下行当 US $12.50) 人民币，超出了普遍预期的 3 ％ ； 非 IFRS 净收入同比增长 21 ％，至 17.0 亿元人民币，比普遍 前价格 19.9% 预期高出 7 ％，主要归因于 GPM 的强劲增长 （ 同比增长 7.9 个百分点 ） 和运营支出的有效控制 13.34 美元 （ 同比增长 8 ％ ） 。TME 凭借其强大的现金产生能力进一步提高了股东的回报，并宣布其首个年 中国互联网 度现金股息为每 ADS 0.137 美元 （ 股息收益率为 c.0 ％ ） 。展望未来，我们预计总收入将同比下 Saiyi He, CFA 降 2%，而非 IFRS 净收入将在第二季度增长 20%，原因是音乐收入的强劲增长和 GPM 的扩张。 (852) 3916 1739 我们将 FY24 - 26 ...

Investment Rating - The report maintains a BUY rating for the company, with a target price raised to US$16.00 from US$12.50 [2][12]. Core Insights - The company reported a 3% year-over-year decline in total revenue to RMB6.77 billion for 1Q24, but this was 3% above consensus estimates, driven by strong online music revenue growth [2]. - Non-IFRS net income increased by 21% year-over-year to RMB1.70 billion, exceeding consensus estimates by 7%, primarily due to gross profit margin (GPM) expansion of 7.9 percentage points year-over-year and effective operating expense control [2]. - The company announced its first annual cash dividend of US$0.137 per ADS, representing approximately a 1.0% dividend yield [2]. Revenue and Profitability - Online music revenue surged by 43% year-over-year to RMB5.01 billion in 1Q24, accounting for 74% of total revenue, with music subscription revenue growing by 39% year-over-year [2][11]. - The GPM improved to 40.9% in 1Q24, up 7.9 percentage points year-over-year, supported by strong growth in music subscription and advertising businesses [2][11]. - The report forecasts a 2% year-over-year decline in total revenue for 2Q24, while non-IFRS net income is expected to grow by 20% [2]. Financial Forecasts - The company’s revenue is projected to reach RMB28.83 billion in FY24, with a gross margin of 42.4% and adjusted net profit of RMB7.44 billion [3][9]. - The adjusted net profit is expected to grow to RMB10.39 billion by FY26, with a gross margin increasing to 44.7% [3][9]. - The report indicates a significant increase in the adjusted net profit margin, expected to reach 29.7% by FY26 [9][10]. Shareholder Returns - The company has enhanced shareholder returns through the announcement of an annual dividend and share repurchases, with 6.9 million ADS repurchased for US$61 million in 1Q24 [2][12]. - The total amount for the announced dividend is US$210 million, which is about 1.0% of the market capitalization [2]. Market Performance - The company’s market capitalization is approximately US$20.56 billion, with a 52-week high of US$13.57 and a low of US$6.02 [6]. - The stock has shown strong performance, with a 1-month increase of 12.6% and a 6-month increase of 81.0% [6].

Tencent Music Entertainment (NYSE:TME) Q1 2024 Earnings Conference Call May 13, 2024 7:00 AM ET Company Participants Millicent Tu - Head of Investor Relations Cussion Kar Shun Pang - Executive Chairman Zhu Liang - Chief Executive Officer Min Hu - Chief Financial Officer Conference Call Participants Alicia Yap - Citigroup Alex Poon - Morgan Stanley Lincoln Kong - Goldman Sachs Zhang Lei - Bank of America Merrill Lynch Ellie Jiang - Macquarie Wei Fang - Mizuho Securities Thomas Chong - Jefferies Millicent Tu ...

Follow Invezz on Telegram , Twitter , and Google News for instant updates >China’s Tencent Music Entertainment Group (TME) faced a mixed financial landscape in the first quarter of fiscal year 2024, as announced on Monday.Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.Tencent Music revenue dips, but profits growCopy link to sectionWhile the company saw a slight revenue decrease of 3.4%, falling to $937 million, it successfully boosted its net profit ...

Revenue Performance - Total revenue for Q1 2024 was RMB 6.77 billion (USD 937 million), a decrease of 3.4% YoY, primarily due to declines in social entertainment and other services, partially offset by strong growth in online music service revenue[2] - Online music service revenue increased to RMB 5,007 million in Q1 2024, up 43% from RMB 3,501 million in Q1 2023[16] - Social entertainment service and other service revenue decreased to RMB 1,761 million in Q1 2024, down 50% from RMB 3,503 million in Q1 2023[16] - Social entertainment and other service revenue decreased by 49.7% YoY to RMB 1.76 billion (USD 244 million), primarily due to adjustments in live interaction features and stricter compliance procedures since Q2 2023, as well as competition from other platforms[7] User Metrics - Online music subscription revenue reached RMB 3.62 billion (USD 501 million), a 39.2% YoY increase, driven by a 20.2% YoY growth in paying users to 113.5 million, with a net addition of 6.8 million users, the highest quarterly net increase to date[2] - Monthly active users (MAU) for online music services were 578 million, a 2.4% YoY decrease, while mobile MAU for social entertainment services dropped 28.7% YoY to 97 million[4] - Average revenue per paying user (ARPPU) for online music services increased 15.2% YoY to RMB 10.6, while ARPPU for social entertainment services decreased 55.4% YoY to RMB 73.4[4] Profitability - Net profit for Q1 2024 was RMB 1.53 billion (USD 212 million), a 27.5% YoY increase, with non-IFRS net profit at RMB 1.81 billion (USD 251 million), up 23.9% YoY[2] - Net profit for Q1 2024 was RMB 1.53 billion (USD 212 million), with non-IFRS net profit reaching RMB 1.81 billion (USD 251 million)[7] - Net profit attributable to equity holders of the company increased to RMB 1,422 million in Q1 2024, a 24% rise from RMB 1,148 million in Q1 2023[17] - Non-IFRS net profit reached RMB 1,812 million in Q1 2024, up 24% from RMB 1,463 million in Q1 2023[18] - Operating profit increased by 41.9% YoY to RMB 1.96 billion (USD 271 million) in Q1 2024, benefiting from improved operational efficiency and effective cost control[7] - Operating profit grew to RMB 1,959 million in Q1 2024, up 42% from RMB 1,381 million in Q1 2023[16] - Gross margin improved from 33.1% to 40.9% YoY, driven by strong growth in music subscription and advertising service revenue, as well as increased original content[7] - Gross profit rose to RMB 2,771 million in Q1 2024, a 20% increase from RMB 2,315 million in Q1 2023[16] Cash and Financial Position - The company's cash, cash equivalents, and term deposits totaled RMB 34.18 billion (USD 4.73 billion) as of March 31, 2024[2] - Cash, cash equivalents, and term deposits totaled RMB 34.18 billion (USD 4.73 billion) as of March 31, 2024, up from RMB 32.22 billion as of December 31, 2023[8] - Total assets increased to RMB 79,176 million as of March 31, 2024, compared to RMB 75,536 million as of December 31, 2023[20] - Cash and cash equivalents decreased to RMB 10,218 million as of March 31, 2024, down 25% from RMB 13,567 million as of December 31, 2023[20] - Time deposits increased to RMB 16,370 million as of March 31, 2024, up 65% from RMB 9,937 million as of December 31, 2023[20] - Total equity increased from RMB 55,907 million in 2023 to RMB 59,316 million in 2024, representing a growth of 6.1%[21] - Retained earnings rose from RMB 16,969 million in 2023 to RMB 18,391 million in 2024, a growth of 8.4%[21] - Total liabilities slightly increased from RMB 18,334 million in 2023 to RMB 18,421 million in 2024, a growth of 0.5%[21] Shareholder Returns - TME announced a 2023 annual cash dividend of approximately USD 210 million to shareholders of record[2] - The board approved an annual cash dividend policy, declaring a dividend of USD 0.1370 per ADS for 2023, with a total cash dividend payment of approximately USD 210 million[10] - The company repurchased approximately 32.2 million ADSs for about USD 235.5 million under the USD 500 million share repurchase program announced on March 21, 2023[9] Earnings Per Share - Basic and diluted earnings per ADS were RMB 0.92 (USD 0.13) and RMB 0.91 (USD 0.13), respectively, with non-IFRS basic and diluted earnings per ADS at RMB 1.11 (USD 0.15) and RMB 1.09 (USD 0.15), respectively[8] - Basic earnings per ADS grew to RMB 0.92 in Q1 2024, a 24% increase from RMB 0.74 in Q1 2023[17] Tax and Compliance - The effective tax rate for Q1 2024 was 19.9%, up from 12.2% in the same period last year, primarily due to a provision for income tax of RMB 107 million (USD 15 million) and changes in preferential tax rates for certain subsidiaries[7] Operational Costs - Operating costs decreased by 14.8% YoY to RMB 4.0 billion (USD 554 million), mainly due to a decline in revenue-sharing costs corresponding to the decrease in social entertainment service revenue, partially offset by increases in content copyright and payment channel costs[7] Cash Flow - Net cash inflow from operating activities increased from RMB 1,852 million in 2023 to RMB 2,686 million in 2024, a growth of 45%[22] - Net cash outflow from investing activities significantly increased from RMB 811 million in 2023 to RMB 5,498 million in 2024, a growth of 577.9%[22] - Net cash outflow from financing activities increased from RMB 80 million in 2023 to RMB 522 million in 2024, a growth of 552.5%[22] - Net decrease in cash and cash equivalents was RMB 3,334 million in 2024, compared to a net increase of RMB 2,583 million in 2023[22] - Ending cash and cash equivalents decreased from RMB 12,129 million in 2023 to RMB 10,218 million in 2024, a decrease of 15.8%[22] Strategic Initiatives - The company expanded its music library through partnerships with labels like TF Entertainment and HIM International, leveraging AI to enhance user interaction and fan engagement[5] - TME launched an audio large model and tested a new AI assistant to improve music discovery and user interaction, alongside introducing incentive points and interactive features to boost user engagement[6] - The company collaborated with Xiaomi SU7 and hosted the QQ Music Peak Festival to strengthen its core user base and promote in-car music consumption[6]