Group 1 - Tencent Music Entertainment Group (TME) announced the resignation of Ms. Linlin Chen from her position as Group Vice President, effective September 30, 2024, for personal reasons [1] - The company expressed gratitude for Ms. Chen's dedicated service and contributions to the success of Kugou Music, a leading music streaming platform in China [1] - TME operates popular music apps including QQ Music, Kugou Music, Kuwo Music, and WeSing, aiming to create endless possibilities with music and technology [2] Group 2 - TME's platform includes online music, online audio, online karaoke, music-centric live streaming, and online concert services, allowing music fans to engage with music in various ways [2]

Core Viewpoint - Tencent Music Entertainment Group (TME) is set to report its unaudited financial results for Q2 2024 on August 13, 2024, before the U.S. market opens [1]. Group 1: Financial Reporting - TME will announce its financial results for the second quarter of 2024 on August 13, 2024 [1]. - A Tencent Meeting Webinar will be held on the same day at 7:00 A.M. Eastern Time or 7:00 P.M. Beijing/Hong Kong Time to discuss the Company's performance [1]. Group 2: Participation Details - Participants interested in joining the webinar must complete online registration in advance [2]. - A live and archived webcast of the webinar will be available on the Company's investor relations website [2]. 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 [3]. - 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 [3].

Core Points - Tencent Music Entertainment Group (TME) held its annual general meeting (AGM) in Hong Kong on June 28, 2024, where all proposed resolutions were passed [1] 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 [2] - 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 [2]

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]

Core Viewpoint - Tencent Music Entertainment Group (TME) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates [1][2] Earnings Estimates - Current-quarter earnings estimate is projected at $0.17 per share, reflecting a year-over-year increase of +30.77% [3] - Over the past 30 days, the Zacks Consensus Estimate for TME has risen by 10.71%, with two estimates moving higher and no negative revisions [3] - For the full year, the earnings estimate stands at $0.68 per share, indicating a +28.3% change from the previous year [4] - The consensus estimate for the current year has increased by 6.9% due to two upward revisions and no negative changes [4] Zacks Rank - TME has achieved a Zacks Rank 2 (Buy), indicating strong potential for outperformance based on favorable estimate revisions [5] - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [5] Stock Performance - TME's stock has increased by 14.4% over the past four weeks, driven by strong estimate revisions and positive analyst sentiment [6] - There is potential for further upside in the stock, suggesting it may be a good addition to investment portfolios [6]

Core Viewpoint - Tencent Music Entertainment Group Sponsored ADR (TME) is currently rated with a Momentum Style Score of A, indicating strong potential for momentum investing [2] Group 1: Momentum Characteristics - TME shares have increased by 15.59% over the past week, outperforming the Zacks Internet - Content industry, which rose by 3.27% during the same period [3] - Over the past month, TME's price change is 29.85%, significantly higher than the industry's 7.09% performance [3] - In the last quarter, TME shares rose by 46.54%, and over the past year, they have increased by 99.87%, while the S&P 500 only moved 7.06% and 28.36% respectively [4] Group 2: Trading Volume - TME's average 20-day trading volume is 8,342,564 shares, which serves as a bullish indicator when combined with rising stock prices [4] Group 3: Earnings Outlook - In the past two months, one earnings estimate for TME has increased, raising the consensus estimate from $0.62 to $0.64 for the full year, with no downward revisions [5] - For the next fiscal year, one estimate has also moved upwards, indicating positive sentiment [5] Group 4: Overall Assessment - TME is classified as a 2 (Buy) stock with a Momentum Score of A, suggesting it is a strong candidate for near-term investment opportunities [6][7]

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]