Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.US) with a target price of 11.51 [2][5][15] Core Insights - The growth in super membership is expected to drive an increase in ARPU (Average Revenue Per User), with non-subscription revenue exceeding expectations. In Q3 2024, online music revenue reached 5.48 billion yuan, a year-on-year increase of 20.4% and a quarter-on-quarter increase of 1.0%. Subscription revenue also grew by 20% year-on-year, amounting to 3.8 billion yuan [3][8] - The company is exploring new avenues in the short drama sector, leveraging its strengths in the music field. Tencent Music is collaborating on a micro-drama titled "Debut, Sound Wave Youth," utilizing its extensive music copyright library and resources [4][14] Summary by Sections Online Music Business - In Q3 2024, Tencent Music's online music business generated revenue of 5.48 billion yuan, reflecting a 20.4% year-on-year growth and a 1.0% quarter-on-quarter growth. Subscription revenue was 3.8 billion yuan, also up 20% year-on-year and 2.7% quarter-on-quarter. The number of paid users increased to 119 million, a 15.5% year-on-year rise, with a payment rate of 20.7% [3][8][9] Social Entertainment Business - The social entertainment segment has faced challenges, with revenue declining by 24% year-on-year to 1.54 billion yuan in Q3 2024. The monthly ARPPU (Average Revenue Per Paying User) decreased by 25% year-on-year [10] Other Online Music Business - Other online music revenue, including advertising and digital album licensing, grew by 20% year-on-year to 1.64 billion yuan, although it saw a slight decline of 2.6% quarter-on-quarter [11][13] Future Growth Drivers - Future growth in online music subscription revenue is anticipated to be driven by the super membership program and stable growth in paid membership numbers. As of September, over 10 million super members were reported, contributing significantly to ARPU [9][10] Market Position - Tencent Music's market position remains strong, with a stable user base and significant monetization potential. The report highlights the company's efforts in cost reduction and efficiency improvements, alongside innovative business developments such as super memberships and short dramas [5][15]
腾讯音乐：超级会员增值显著，初试短剧赛道