EBSCN·2025-05-14 15:24Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [5] Core Views - Tencent Music's 1Q25 performance slightly exceeded Bloomberg consensus expectations, achieving revenue of 7.36 billion RMB (up 8.7% YoY) and adjusted net profit of 2.23 billion RMB (up 22.8% YoY) [1][2] - The company is expected to benefit from a solid competitive barrier, with the SVIP program anticipated to boost ARPPU, while non-subscription revenue streams such as advertising and live performances are expected to contribute additional growth [3] Summary by Sections Financial Performance - In 1Q25, Tencent Music's online music revenue reached 5.8 billion RMB (up 15.9% YoY), accounting for 78.9% of total revenue, driven by strong subscription and advertising growth [2] - The adjusted net profit forecast for 2025-2027 has been slightly revised upwards to 9.35 billion, 10.91 billion, and 12.50 billion RMB, reflecting increases of 4.2%, 4.6%, and 6.6% respectively [3][4] Revenue Breakdown - Subscription revenue was 4.22 billion RMB (up 16.6% YoY), with a total of 123 million paying users, an increase of 8.3% YoY [2] - Other music revenue, including advertising, reached 1.58 billion RMB, showing a growth of approximately 14% [2] Cost and Profitability - Operating profit for 1Q25 was 4.84 billion RMB (up 146.9% YoY), primarily due to high growth in other income, including a 2% stake in Universal Music [3] - The company expects an increase in revenue growth rate for the full year 2025 compared to 2024, with a slight rise in sales expenses and potential improvements in profit margins [3]