Core Viewpoint - Tencent Music is actively expanding its investment and subscription innovations, focusing on enhancing its content offerings and competitive advantages in the audio streaming market [3][4][5]. Group 1: Investment Activities - Tencent Music announced a full acquisition of Ximalaya for a total consideration of approximately $1.26 billion, which includes cash, new shares, and shares for founders, aiming to strengthen its long audio content portfolio [3]. - The company has become the second-largest shareholder of SM Entertainment by acquiring all shares held by HYBE, ensuring access to top K-pop content and enhancing its market position in China [4]. Group 2: Subscription Innovations - QQ Music has introduced a new "Earning Listening" membership model that combines advertising and subscription, currently in testing phase, aimed at price-sensitive users to reduce active user churn [5]. - The integration of the social platform Bubble into QQ Music allows fans to interact with K-pop artists, enhancing user engagement and providing new monetization opportunities through membership offerings [6].

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.N) [6] Core Insights - Tencent Music is actively expanding its content ecosystem through strategic acquisitions and innovative subscription models [2][3][4] - The acquisition of Ximalaya enhances Tencent Music's long audio content portfolio, with Ximalaya boasting over 303 million monthly active users in 2023 [2] - Strengthening K-POP copyright advantages through the acquisition of SM Entertainment shares positions Tencent Music as a key player in the K-POP market [3] - The introduction of the "Earn While Listening" membership model combines advertising and subscription revenue, targeting price-sensitive users [3] - The integration of the Bubble social platform allows for enhanced artist-fan interaction, further solidifying user engagement [4] Financial Projections - Revenue is projected to grow from 27,752 million RMB in 2023 to 37,349 million RMB in 2027, with a compound annual growth rate (CAGR) of approximately 8.6% [5][9] - Adjusted net profit is expected to increase from 5,923 million RMB in 2023 to 12,496 million RMB in 2027, reflecting a robust growth trajectory [5][9] - The adjusted earnings per share (EPS) is forecasted to rise from 1.91 RMB in 2023 to 4.03 RMB in 2027 [5][9] Market Position - Tencent Music's market capitalization is approximately 31.04 billion USD, with a total share count of 3.098 billion [6] - The stock has shown strong performance, with a relative return of 28.4% over the past year [8]