Core Insights - Citigroup's research report indicates that Tencent Music's total revenue for Q3 increased by 20.6% year-on-year to 8.46 billion yuan, exceeding both Citigroup's and market expectations by 3% [1] Revenue Breakdown - Online music service revenue grew by 27.2% year-on-year to 6.97 billion yuan, surpassing Citigroup's expectations by 4%, driven by robust growth in music subscription revenue, as well as increases in offline performances, advertising services, and artist merchandise [1] - Subscription revenue rose by 17.2% year-on-year to 4.5 billion yuan, accounting for approximately 53% of total revenue [1] - Social entertainment revenue declined by 2.7% year-on-year to 1.49 billion yuan, falling short of Citigroup's expectations by 1% [1] Profitability Metrics - Adjusted net profit for the period was 2.48 billion yuan, representing a year-on-year increase of 28%, exceeding Citigroup's and market expectations by 8% and 7% respectively, attributed to better-than-expected revenue and improved gross margins, although partially offset by increased operating expenses [1] Investment Rating - Citigroup has set a target price of $29 for Tencent Music's U.S. shares and maintains a "Buy" rating [1]

Core Insights - The report highlights a mixed performance in the Chinese stock market, with Hong Kong stocks rising, particularly in healthcare, conglomerates, and real estate, while consumer discretionary, industrials, and materials lagged behind [3] - Southbound capital saw a net inflow of HKD 4.286 billion, with notable net purchases in Xiaomi Group, Xpeng Motors, and Pop Mart, while Alibaba, Hua Hong Semiconductor, and SMIC experienced the most significant net sales [3] - The report anticipates a trend of style switching in the Chinese stock market, with undervalued sectors like chemicals, consumer goods, and banks leading the gains, expected to continue at least until mid-December when policy stimulus clarity increases [3] Market Performance Summary - The Hang Seng Index closed at 26,923, up 0.85% for the day and 34.21% year-to-date [1] - The Hang Seng Tech Index closed at 5,934, with a slight increase of 0.16% for the day and a year-to-date increase of 32.81% [1] - The Shanghai Composite Index closed at 4,000, down 0.07% for the day but up 19.34% year-to-date [1] Sector Performance Summary - The Hang Seng Financial Index closed at 49,396, up 1.20% for the day and 40.58% year-to-date [2] - The Hang Seng Real Estate Index closed at 19,533, with a significant increase of 3.34% for the day and 30.98% year-to-date [2] - The Hang Seng Utilities Index closed at 38,428, up 1.17% for the day and 7.75% year-to-date [2] Company Analysis - Tencent Music reported a 21% year-on-year revenue growth to RMB 8.46 billion for Q3 2025, with Non-IFRS net profit increasing by 33% to RMB 2.41 billion, exceeding Bloomberg consensus estimates by 3% and 4% respectively [4] - The report projects a slowdown in revenue growth to 12% year-on-year for Q4 2025, primarily due to normalization of offline performance revenue [4] - The target price for Tencent Music has been adjusted from USD 29.5 to USD 28.0, maintaining a "Buy" rating [4]

该行认为腾讯音乐是中国内地音乐串流市场的领导者，但当前估值已处于合理水平；维持"中性"评级， 港股目标价98.13港元，美股目标价25美元。 美银证券发表研究报告指，腾讯音乐第三季业绩大致符合预期，经调整净利润按年升33%至24.1亿元， 较市场预期高4%，因收入增长较好及税项开支减少。该行满意有关盈利表现，但注意到公司今次的新 闻稿未披露SVIP数量，而上季为1500万。另外，该行亦留意到近期投资者对字节跳动的竞争忧虑有所 升温，可能对短期市场情绪构成压力。 ...

Core Viewpoint - The report from CICC indicates that Tencent Music (01698) is expected to see significant growth in new business in 2025, with projected Non-IFRS net profits of 9.63 billion yuan and 10.75 billion yuan for 2025 and 2026 respectively, maintaining an outperform rating in the industry [1] Group 1: Financial Performance - In Q3 2025, Tencent Music reported revenues of 8.46 billion yuan, a year-on-year increase of 20.6%, and Non-IFRS net profit of 2.41 billion yuan, up 32.6%, slightly exceeding CICC's expectations [2] - The company’s online music subscription revenue in Q3 2025 grew by 17.2% to 4.49 billion yuan, with a net increase of 1.3 million paying users, reaching a total of 126 million [3] Group 2: Business Segments - The subscription business shows profitability resilience, while non-subscription business demonstrates growth potential, with non-subscription revenue in Q3 2025 increasing by 50.3% to 2.48 billion yuan, driven by concert and artist economy revenues [3] - The company expects a continued increase in paid users and ARPPU, projecting a rise to 12.1 yuan/month in Q4 2025 [3] Group 3: Margin and Investment - Q3 2025 gross margin was 43.5%, with stable sales expenses and a 5.3% year-on-year increase in management expenses; the company is investing in offline performances and IP economy, which may impact short-term margins but is expected to support long-term growth [4] - The fluctuation in gross margin is attributed to the rising proportion of concert-related revenues, with expectations for a rebound in Q4 2025 [4] Group 4: Strategic Direction - The company is committed to a dual-wing strategy, focusing on deepening collaborations with global record labels and enhancing its own IP matrix, while innovating product features and services to expand multi-terminal scenarios [5] - Content payment, content privileges, and functional privileges are identified as key growth drivers, with the potential for increased commercial advantages through deeper value extraction from the music entertainment industry [5]

Core Viewpoint - The report from CICC indicates that Tencent Music (01698) is expected to see significant growth in new business in 2025, with projected Non-IFRS net profits of 9.63 billion and 10.75 billion yuan for 2025 and 2026 respectively, maintaining an outperform rating in the industry [1] Group 1: Financial Performance - Tencent Music's Q3 2025 performance slightly exceeded expectations, with revenue of 8.46 billion yuan, a year-on-year increase of 20.6%, and Non-IFRS net profit of 2.41 billion yuan, a year-on-year increase of 32.6% [2] - The subscription music business shows resilience, with Q3 2025 subscription revenue increasing by 17.2% to 4.49 billion yuan, and the number of paying users rising by 1.3 million to 12.6 million [2] - Non-subscription revenue grew significantly by 50.3% to 2.48 billion yuan in Q3 2025, driven by rapid growth in concert and artist economy revenues [2] Group 2: Business Strategy and Growth Potential - The company is focusing on a dual-wing strategy to explore the full value of the industry chain, enhancing cooperation with global record companies and building its own IP matrix [3] - The company aims to innovate product features and services to expand multi-terminal scenarios, with content payment and privileges forming important growth drivers [3] - The investment in new business may impact short-term gross margins, but the company maintains a positive outlook for long-term operational leverage [2]

Summary of Tencent Music Entertainment Group (TME) 3Q25 Earnings Review Company Overview - **Company**: Tencent Music Entertainment Group (TME) - **Market Cap**: $32.3 billion - **Enterprise Value**: $27.2 billion - **Current Price**: $20.75 - **12-Month Price Target**: $25.20 (Upside: 21.4%) [1][2] Key Financial Highlights - **3Q25 Results**: TME reported a small beat on revenue and profit, but shares declined by approximately 8-9% during trading [2] - **Revenue Forecasts**: - 2025E Revenue: Rmb 32,697.5 million (up from Rmb 32,309.7 million) [4] - 2026E Revenue: Rmb 36,937.3 million (up from Rmb 36,367.8 million) [4] - **Net Profit Forecasts**: - 2025E Net Profit: Rmb 9,645.0 million (up from Rmb 9,645.0 million) [4] - 2026E Net Profit: Rmb 10,747.4 million (down from Rmb 11,000 million) [4] Core Insights and Arguments - **Market Concerns**: - Increased competition among music streaming platforms (e.g., Soda Music) may impact TME's subscriber growth and pricing strategy [2] - Volatility in the live performance business could weigh on group margin expansion in 2026 [2] - **Growth Narrative**: Despite concerns, TME's growth narrative remains intact due to its unique content and value-added services for over 500 million monthly active users (MAUs) [2] - **Revenue Diversification**: TME is expected to achieve solid Average Revenue Per User (ARPU) growth through SVIP penetration and additional service offerings, alongside expansion into live entertainment and fan economy businesses [2] Future Projections - **2026E Expectations**: - Group revenue growth of 16%+ [3] - Online music revenue growth of 17% year-over-year [17] - Gross Profit (GP) of Rmb 16.2 billion with a Gross Profit Margin (GPM) of 43.9% [17] - Non-GAAP Net Profit (NP) of Rmb 10.7 billion with a Net Profit Margin (NPM) of 29.1% [17] Risks and Challenges - **Key Risks**: - Potential derailment from the beat-and-raise cycle [18] - Higher-than-expected content pricing from label companies [18] - Inability to maintain market dominance amid increasing competition [18] - Slower-than-expected growth in non-subscription online music services [18] - Decline in social entertainment business [18] Additional Insights - **ARPU Forecast**: Expected to reach Rmb 19.4 for SVIP and Rmb 10.7 for basic members by 2025E [28] - **Subscriber Growth**: Anticipated growth in quarterly net additions of music subscribers, albeit at a slower pace [30] - **SVIP Membership**: Expected to reach 25.9 million by 2027E, with penetration increasing from 13% to 19% of total paying members [32] Conclusion - TME is positioned to leverage its unique offerings and user base to drive future growth, despite facing competitive pressures and market volatility. The company maintains a "Buy" rating with a revised price target reflecting its growth potential and market leadership in the music streaming industry [3][4]

Core Viewpoint - Tencent Music Entertainment Group reported steady growth in its financial performance for the third quarter ending September 30, 2025, with total revenue reaching 8.46 billion yuan, a year-on-year increase of 20.6%, and adjusted net profit of 2.48 billion yuan, up 27.7% [1] Financial Performance - Total revenue for the third quarter was 8.46 billion yuan, reflecting a 20.6% year-on-year growth [1] - Adjusted net profit for the quarter was 2.48 billion yuan, representing a 27.7% increase compared to the previous year [1] Online Music Business - Online music service revenue grew by 27.2% year-on-year to 6.97 billion yuan [1] - Average revenue per paying user increased from 10.8 yuan in the same quarter of 2024 to 11.9 yuan [1] Strategic Initiatives - The company attributes its robust growth to the deepening of its "content and platform" strategy [1] - Tencent Music has strengthened collaborations with global record companies and artists, hosting large-scale domestic and international tours, and expanding its own performance IP matrix [1] - Continuous innovation in product features and services aims to meet diverse user needs and create personalized music experiences [1] Future Outlook - Tencent Music plans to seize emerging opportunities and expand its music service offerings while collaborating with industry partners to promote healthy industry development [1]

Core Viewpoint - Tencent Music's financial performance for Q3 2025 exceeded expectations, driven by strong growth in non-subscription services and steady growth in subscription services [1][2] Group 1: Financial Performance - Total revenue for Tencent Music reached RMB 84.6 billion, representing a year-on-year increase of 20.6% [1] - Net profit attributable to equity holders was RMB 21.5 billion, up 36.0% year-on-year [1] - Non-IFRS net profit attributable to equity holders was RMB 24.1 billion, reflecting a 32.6% year-on-year growth [1] - Diluted earnings per American Depositary Share (ADS) were RMB 1.38 [1] - As of September 30, 2025, the total balance of cash, cash equivalents, time deposits, and short-term investments was RMB 360.8 billion [1] Group 2: Strategic Insights - Huatai Securities highlighted that Tencent Music's revenue and profit surpassed consensus expectations, primarily due to robust growth in non-subscription business [2] - The company continues to expand the boundaries of music services under its "one body, two wings" strategy, integrating content and platform [2] - The firm is recognized for its strong operational capabilities in industry chain integration and has a long-term stable monetization ability within a diverse content ecosystem [2]

Group 1 - The Hang Seng Tech Index decreased by 1% to 5,872.88 points [1] - Tencent Music led the decline among constituent stocks, falling over 10% [1]

Core Insights - Tencent Music Entertainment Group reported Q3 2025 financial results, showing total revenue of 8.46 billion yuan, a year-on-year increase of 20.6%, and a net profit of 2.21 billion yuan, with profit attributable to equity holders at 2.15 billion yuan [1] Revenue Breakdown - Online music service revenue grew by 27.2% to 6.97 billion yuan, while social entertainment and other services revenue decreased by 2.7% to 1.49 billion yuan [2] User Metrics - The number of paying users for online music services reached 125.7 million, a year-on-year increase of 5.6%, and the ARPPU (Average Revenue Per Paying User) was 11.9 yuan, up 10.2% [3] Competitive Landscape - The report marks the first full financial quarter for Tencent Music following the acquisition of Ximalaya. However, the impact of Ximalaya on user subscriptions and long audio services has yet to be reflected in the data. Monthly active users for online music services decreased to 551 million year-on-year [4] Market Competition - ByteDance's music products are intensifying competition in the domestic online music market. Despite Tencent's music apps leading in monthly active users, ByteDance's products are showing significant growth rates, with some reaching over 90% year-on-year [5] Strategic Responses - Tencent Music's executives acknowledged the competitive pressure, emphasizing that music is a traditional business where library advantages and user asset accumulation remain core strengths. The company is expanding its offerings with services like Starlight Card and Bubble, which are not available from competitors [5] Growth Drivers - Beyond traditional music content subscriptions, Tencent Music is focusing on content derivatives and user rights operations as growth drivers. The company plans to increase investments in live performances and proprietary events to differentiate itself in the market [6] Cost Trends - Tencent Music's operating costs have returned to positive growth, with costs reported at 4.11 billion yuan, 4.69 billion yuan, and 4.78 billion yuan for the first three quarters, reflecting year-on-year increases of 2.9%, 13.1%, and 18.8% respectively [6]