Investment Rating - The investment rating for Tencent Music (TME.N) has been upgraded to "Buy" [2][5][15] Core Insights - The online music business is experiencing robust growth, with an expected year-on-year increase of 25% in 2024. The company is also expected to continue improving its operational capabilities, leading to higher gross and profit margins [2][15] - As of December 2023, the company has a strong cash position, with cash and cash equivalents totaling 32.2 billion yuan [2][15] - The adjusted net profit forecast for 2024-2026 is set at 7 billion, 7.9 billion, and 8.8 billion yuan respectively, reflecting an upward adjustment of 3% to 5% [2][15] Summary by Sections Financial Performance - In Q4 2023, Tencent Music reported total revenue of 6.89 billion yuan, a year-on-year decrease of 7.2% but a quarter-on-quarter increase of 4.9%. Online music revenue accounted for 73% of total revenue [1][6] - The gross margin for Q4 2023 was 38.3%, up 5.4 percentage points year-on-year and 2.7 percentage points quarter-on-quarter. This increase is attributed to higher ARPPU in online music and growth in high-margin advertising business [1][6] - The adjusted net profit for Q4 2023 was 1.68 billion yuan, representing a year-on-year increase of 12.5% [1][6] Online Music Business - Online music revenue reached 5.02 billion yuan in Q4 2023, marking a year-on-year increase of 41%. Subscription revenue alone was 3.4 billion yuan, up 46% year-on-year [1][9] - The monthly ARPPU for online music was 10.7 yuan, reflecting a year-on-year increase of 20.2% [1][10] - The subscription payment rate reached 18.5%, an increase of 2.9 percentage points year-on-year, with the number of paid users growing by 20.6% [1][9] Social Entertainment Business - Social entertainment and other revenue totaled 1.87 billion yuan in Q4 2023, down 52% year-on-year. The monthly ARPPU for social entertainment was 78 yuan, a decrease of 54% year-on-year [1][12] - The company anticipates a narrowing of revenue decline in the social entertainment segment in 2024, expecting quarterly revenue to stabilize around 1.7 billion yuan [1][12]
在线音乐业务蓬勃发展，预计24年利润侧仍有优化空间