EBSCN·2026-03-18 11:18Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [6] Core Insights - Tencent Music's total revenue for Q4 2025 reached 8.64 billion RMB, a year-over-year increase of 15.9%, exceeding Bloomberg's consensus estimate of 8.42 billion RMB [1] - The online music business continues to show robust growth, with revenue of 7.10 billion RMB, up 21.7% year-over-year, accounting for 82.2% of total revenue [2] - Subscription revenue grew to 4.56 billion RMB, a 13.2% increase year-over-year, with a total of 127 million subscribers [2] - Non-subscription revenue surged to 2.54 billion RMB, reflecting a 40.8% year-over-year growth, driven by strong performance in advertising and related merchandise [2] - The company expects subscription revenue to face short-term pressure due to intensified industry competition [2] Financial Performance Summary - The gross profit margin for the full year 2025 was 44.2%, an increase of 1.9 percentage points year-over-year, primarily due to a higher proportion of high-margin subscription and advertising businesses [3] - The adjusted net profit for 2026-2027 has been revised down to 10.5 billion RMB and 11.5 billion RMB, respectively, reflecting a 5%-8% reduction from previous forecasts [4] - The company anticipates that the gross margin will remain stable or slightly decline in 2026 due to increased investment in offline performances and related businesses [3][4] Earnings Forecast and Valuation - Revenue projections for 2024 to 2028 are as follows: 28.4 billion RMB in 2024, 32.9 billion RMB in 2025, 36.3 billion RMB in 2026, 39.5 billion RMB in 2027, and 42.0 billion RMB in 2028 [5] - The adjusted net profit is expected to grow from 7.67 billion RMB in 2024 to 12.36 billion RMB in 2028, with growth rates varying from 29.5% in 2024 to 7.8% in 2028 [5]