TME(US:TME) Zhong Guo Jing Ying Bao·2025-05-02 20:12Core Viewpoint - Tencent Music Group is reportedly planning to acquire Himalaya, with the deal initiated two months ago and the price significantly reduced, although both companies have not confirmed the sale yet [1][3]. Group 1: Acquisition Context - The potential acquisition of Himalaya by Tencent Music is speculated to be driven by three main factors: the challenging market environment for niche audio applications, Tencent's significant influence in the audio sector, and the need for Tencent to enhance its offerings in paid audio content [1]. - Previous discussions between Tencent Music and Himalaya regarding a partnership were hindered by management control issues, but recent capital movements by Himalaya, such as a substantial increase in registered capital, are seen as signals for a possible acquisition restart [1][2]. Group 2: Company Performance - Himalaya, founded in 2012, is the largest online audio platform in China, leading in mobile listening duration and online audio revenue as of 2023 [2]. - Despite its leading position, Himalaya has faced growth challenges, with its average monthly active users increasing by only 3.9% from 2021 to 2023, compared to a 24.4% increase in 2021 [2]. Group 3: Financial Overview - Himalaya has attempted multiple IPOs, with a valuation of approximately $5 billion in 2021, but the current acquisition valuation is expected to be between $1 billion and $1.5 billion [3]. - The company's revenue from 2021 to 2023 shows a slight increase, with total revenues of 58.6 billion, 60.6 billion, and 61.6 billion respectively, while net profits fluctuated, with a significant loss in 2021 turning into a profit of 2.24 billion in 2023 due to cost-cutting measures [3][4]. - Subscription services remain the primary revenue source for Himalaya, accounting for 51.7% of total revenue in 2023, although paid content revenue has declined from 10.58 billion in 2021 to 6.94 billion in 2023 [4]. Group 4: Market Challenges - Himalaya's advertising revenue has also seen a decline, with figures of 14.88 billion, 14.49 billion, and 14.23 billion from 2021 to 2023, indicating challenges in monetizing its platform effectively [4]. - The audio app market is perceived as facing significant competition from larger platforms that can offer similar functionalities, leading to skepticism about the future growth of audio apps like Himalaya [5].