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]

SHENZHEN, China, May 13, 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 its unaudited financial results for the first quarter ended March 31, 2024 and declared its annual cash dividend for the year ended December 31, 2023. First Quarter 2024 Financial Highlights Total revenues were RMB6.77 billion (US$937 million), representing a 3.4% year-over-year decrease, mai ...