Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [2][4] Core Views - The online music business is experiencing robust growth, with expectations for continued profit optimization in 2024 [2][10] - The company has a strong cash position, with cash and cash equivalents totaling 34.18 billion yuan as of March 2024, and has initiated a cash dividend distribution of 1.21 billion USD [2][10] - The adjusted net profit forecast for 2024-2026 has been raised, with expected figures of 7.462 billion, 8.586 billion, and 9.345 billion yuan respectively [2][10] Summary by Sections Financial Performance - In Q1 2024, Tencent Music reported total revenue of 6.77 billion yuan, a year-on-year decrease of 3.4% and a quarter-on-quarter decrease of 1.8% [5][6] - Online music revenue accounted for 74% of total revenue, with a significant year-on-year growth of 43% to 5.01 billion yuan [5][6] - The gross margin improved to 40.9%, up 7.9 percentage points year-on-year, driven by growth in subscription and advertising revenues, as well as improved returns on music copyright investments [5][6] User Growth and Subscription Business - The number of paid users for online music reached 114 million, a year-on-year increase of 20.2%, with a payment rate of 19.6%, up 3.7 percentage points [7][10] - The company is confident that the total net increase in subscriptions for 2024 will exceed previous forecasts, although it will be slightly lower than in 2023 due to base effect adjustments [7][10] Social Entertainment Business - The social entertainment and other revenue for Q1 2024 was 1.76 billion yuan, a year-on-year decline of 50% and a quarter-on-quarter decline of 6% [10] - The decline in social entertainment revenue is attributed to the company's proactive ecosystem adjustments, which resulted in a 55% year-on-year decrease in user ARPPU [10]
腾讯音乐：订阅用户提升顺利，公司派发现金股息