Investment Rating - The report maintains a "Strong Buy" investment rating for Tencent Music [2][5] Core Insights - The company achieved total revenue of 8.46 billion RMB in Q3 2025, representing a year-on-year growth of 20.6%, with adjusted net profit increasing by 32.6% to 2.41 billion RMB [1][5] - Online music revenue continues to grow steadily, with a 27.2% year-on-year increase to 6.97 billion RMB, driven by subscription and advertising services [5][6] - The company is actively expanding into the fan economy and concert business, enhancing its competitive advantages through collaborations and content diversification [5][6] Financial Performance - Revenue and profit growth are supported by effective cost control, with gross margin improving from 42.6% in Q3 2024 to 43.5% in Q3 2025 [5][6] - The online music subscription revenue reached 4.5 billion RMB, up 17.2% year-on-year, driven by an increase in ARPPU from 10.8 RMB to 11.9 RMB [5][6] - The company expects revenues to reach 32.66 billion RMB, 36.98 billion RMB, and 41.30 billion RMB for the years 2025, 2026, and 2027 respectively, with adjusted net profits projected at 9.60 billion RMB, 10.85 billion RMB, and 12.18 billion RMB [6][8] Market Position and Strategy - Tencent Music holds a strong position in content copyright, with a focus on enhancing user willingness to pay and optimizing membership benefits [5][6] - The company is expanding its concert business, having successfully hosted multiple performances in various cities, attracting over 150,000 attendees [5][6] - The introduction of interactive fan communities and exclusive artist-related benefits is expected to drive further growth in subscription rates and user engagement [5][6]

Core Insights - Tencent Music's Q3 revenue reached 8.463 billion yuan, a year-on-year increase of 21%, exceeding Bloomberg's expectations by 2.8%, driven by growth in fan economy-related income [1] - The adjusted net profit attributable to shareholders (Non-IFRS) for Q3 was 2.41 billion yuan, a year-on-year increase of 33%, also surpassing Bloomberg's expectations by 3.7%, primarily due to high growth in online music [1] Revenue Breakdown - Online music revenue for Q3 was 6.97 billion yuan, up 27% year-on-year, with membership revenue contributing 4.49 billion yuan, an 18% increase year-on-year, driven by SVIP package offerings [2] - The average revenue per paying user (ARPPU) for Q3 was 11.9 yuan/month, a 12% year-on-year increase, with expectations for Q4 ARPPU to reach 12.2 yuan/month, a 14% increase year-on-year [2] - Non-subscription revenue for Q3 was 2.48 billion yuan, a significant 48% year-on-year increase, attributed to strong performance in concerts and innovative advertising formats [2] Social Entertainment Performance - Social entertainment revenue for Q3 was 1.49 billion yuan, a decrease of 2.7% year-on-year, primarily due to adjustments in live interaction features and stricter compliance procedures, though it has stabilized [2] - Q4 social entertainment revenue is expected to reach 1.50 billion yuan, reflecting an 8% year-on-year decline [2] Profit Forecast and Valuation - The company anticipates net profits attributable to shareholders for 2025-2027 to be 11.2 billion, 10.1 billion, and 11.4 billion yuan respectively, with adjustments made to membership payment rates and ARPPU [3] - A target price of 87.50 HKD (79.74 RMB) is set for 2026, based on a 24x P/E ratio, maintaining a "buy" rating [3]

Core Viewpoint - The company reported strong Q3 2025 results, exceeding Bloomberg expectations with significant revenue and profit growth driven by online music subscription services and non-subscription revenue streams [1][2]. Financial Performance - Q3 2025 revenue reached 8.46 billion yuan, a year-over-year increase of 20.6% and a quarter-over-quarter increase of 0.2% [1] - Net profit attributable to shareholders was 2.15 billion yuan, up 36% year-over-year but down 11% quarter-over-quarter [1] - Non-GAAP net profit stood at 2.48 billion yuan, reflecting a year-over-year increase of 28% and a quarter-over-quarter decrease of 6% [1] - Operating costs increased by 18.8% year-over-year, primarily due to rising costs in offline performances, IP-related expenses, and advertising agency fees [1] - Gross margin was 43.5%, showing a year-over-year increase of 0.9 percentage points but a quarter-over-quarter decrease of 0.9 percentage points [1] Business Segmentation - Online music service revenue was 6.97 billion yuan, a year-over-year increase of 27.2% and a quarter-over-quarter increase of 1.7% [2] - Subscription revenue within online music was 4.50 billion yuan, up 17.2% year-over-year and 2.7% quarter-over-quarter, driven by an increase in ARPPU [2] - Non-subscription revenue surged to 2.47 billion yuan, a year-over-year increase of 50.6% [2] User Metrics - The online music monthly active users (MAU) reached 551 million, a year-over-year decrease of 4% [2] - The number of paying users increased to 126 million, a year-over-year increase of 6% and a quarter-over-quarter increase of 1% [2] - The paying rate was 22.8%, up 2.2 percentage points year-over-year [2] Strategic Initiatives - The company is expanding its artist matrix by closely collaborating with K-POP and introducing 15 Chinese label artists [3] - A strategic partnership with Weverse, a well-known overseas fan service platform, will enhance user engagement on QQ Music [3] Profit Forecast - Revenue projections for 2025-2027 are 32.979 billion yuan, 36.856 billion yuan, and 40.732 billion yuan respectively, with net profits expected to be 11.127 billion yuan, 9.837 billion yuan, and 11.156 billion yuan [3] - The company maintains a "buy" rating based on the anticipated growth in online music paid users and ARPPU, alongside strong performance in non-subscription revenue [3]

Core Viewpoint - Tencent Music's Q3 performance exceeded expectations, driven by strong growth in non-subscription business and stable subscription growth [1] Financial Performance - Revenue increased by 21% year-on-year, with non-subscription business growing by 51% year-on-year and subscription business growing by 17% year-on-year [1] - Non-GAAP net profit exceeded expectations by 4% [1] Investment Outlook - The company is viewed positively due to its strong content and services, establishing a solid competitive moat [1] - The target price for US stocks has been revised down from $29.2 to $25.6, maintaining a "Buy" rating [1]

Group 1 - The concept of price increase based on supply and demand has become a key logic for fund managers to identify potential stocks [1] - As year-end risk aversion rises, the certainty brought by the price increase logic meets the dual demands of fund stock selection [1] - The price increase logic has been highly recognized by retail investors and public funds, with examples including Moutai, Tencent Music, and Meitu [1] Group 2 - Recent price increases in the chemical industry have become an important factor for funds to discover good stocks amid expanding demand [1]

Investment Rating - The investment rating for Tencent Music (TME.N) is "Outperform the Market" [5][27]. Core Views - Tencent Music's online music business is experiencing steady growth, with a revenue increase of 20.6% year-on-year in Q3 2025, reaching 8.46 billion yuan. The adjusted profit margin also improved by 1.6 percentage points year-on-year [1][9]. - The company is expanding into the broader music sector, which is expected to drive future growth. The focus for 2026 will be on investments in this area, including the acquisition of Himalaya, which is anticipated to enhance ARPPU and contribute to profit growth [3][25]. - The subscription business is showing strong performance, with a 17.2% year-on-year revenue growth in Q3 2025, and the monthly ARPPU increased by 10.2% year-on-year to 11.9 yuan [2][17]. Summary by Sections Financial Performance - In Q3 2025, Tencent Music achieved total revenue of 8.46 billion yuan, a year-on-year increase of 20.6% and a quarter-on-quarter increase of 0.2%. Online music revenue accounted for 82% of total revenue [1][9]. - The gross margin for Q3 2025 was 43.5%, up 0.9 percentage points year-on-year but down 0.9 percentage points quarter-on-quarter, primarily due to the development of offline events [1][9]. - Adjusted net profit for Q3 2025 was 2.48 billion yuan, reflecting a year-on-year increase of 27.7% [1][9]. Subscription Business - The subscription revenue reached 4.5 billion yuan in Q3 2025, growing 17.2% year-on-year, with a net increase of 1.3 million paying users, resulting in a payment rate of 22.8% [2][17]. - The number of online music paying users was 126 million, an increase of 5.6% year-on-year [2][17]. Other Online Music Revenue - Other online music services, including advertising and digital albums, generated 2.47 billion yuan in revenue, a significant year-on-year increase of 50.5% [2][21]. - The advertising business is expanding its product offerings, and offline events, such as concerts, are contributing to revenue growth [2][21]. Social Entertainment Business - Revenue from social entertainment and other services was 1.49 billion yuan in Q3 2025, showing a decline of 2.7% year-on-year, but the decline is narrowing [2][24]. Financial Forecasts - The adjusted net profit forecasts for 2025-2027 are 9.6 billion, 10.9 billion, and 12.2 billion yuan, respectively, with a slight downward adjustment of 1-4% [3][25]. - The company is expected to maintain a strong market position with significant growth potential in the broader music sector [3][25].

Core Viewpoint - Tencent Music (TME.US) is expected to halt a three-day decline in stock price, with a pre-market increase of 1.34%. Despite exceeding Q3 performance expectations, concerns over competition, particularly from ByteDance's subsidiary, are pressuring the stock. Citigroup maintains a "Buy" rating, highlighting TME's transition towards a more robust social music ecosystem, which may initially impact gross margins but is expected to drive sustainable growth in the long term [1]. Group 1 - Tencent Music's stock price increased by 1.34% in pre-market trading, indicating a potential end to a three-day decline [1]. - Citigroup's report emphasizes that despite strong Q3 results, market concerns about competition are affecting TME's stock performance [1]. - The report suggests that TME is evolving into a higher barrier social music ecosystem, which may initially affect gross margins due to investments in live concert operations [1]. Group 2 - TME's stock closed at $18.680, with a pre-market price of $18.930, reflecting a change of +0.250 [2]. - The stock's trading volume was 15.259 million, with a market capitalization of $28.934 billion [2]. - TME's 52-week high and low are $26.700 and $10.132, respectively, indicating significant volatility in its stock price [2].

Core Viewpoint - Jianyin International's report indicates that Tencent Music's Q3 revenue and non-GAAP net profit exceeded market expectations by 3% and 4% respectively, with strong performance in non-subscription music services [1] Group 1: Financial Performance - Tencent Music's Q3 revenue and non-GAAP net profit surpassed market expectations by 3% and 4% respectively [1] - The company is expected to continue investing in offline events and artist merchandise to enhance its online and offline integrated music ecosystem, which may pressure profit margins in the short term [1] Group 2: Future Outlook - By 2026, Tencent Music is anticipated to maintain its leadership position and sustainable profitability due to its differentiated business model, quality content supply, user base, and diversified revenue sources [1] - The company is rated "Outperform" with a target price of HKD 105.7 for H-shares and USD 27.1 for US shares, corresponding to a projected P/E ratio of 28 times for 2026, which is a 40% discount compared to global leader Spotify [1] - The recent decline in stock price is viewed as a good entry point for investors [1]

Core Viewpoint - Daiwa's research report indicates that Tencent Music's Q3 performance was robust, with revenue and earnings per share exceeding market expectations by 3% [1] Group 1: Financial Performance - Revenue surprise primarily driven by strong growth in non-subscription music revenue, which increased by 51% year-on-year [1] - The company's ADR decline reflects market concerns regarding competitive landscape and lower-than-expected gross margin guidance for 2026 [1] Group 2: Analyst Ratings and Forecasts - Daiwa maintains an "Outperform" rating on Tencent Music, with the target price reduced from HKD 106 to HKD 91 [1] - Earnings per share forecasts for 2025 to 2027 have been lowered by 9% to 14% due to a decrease in subscription revenue [1]

Core Viewpoint - Nomura's report indicates that Tencent Music's Q3 performance exceeded expectations, with a year-on-year revenue growth of 21%, reaching 8.5 billion yuan, surpassing market and Nomura's forecasts [1] Revenue Performance - Non-subscription online music service revenue grew by 51% year-on-year, exceeding Nomura's forecast of 35% [1] - Overall revenue reached 8.5 billion yuan, which is higher than market predictions [1] Profitability Metrics - Gross margin improved by 0.9 percentage points to 44% year-on-year [1] - Non-IFRS operating profit margin increased by 2.8 percentage points to 31% due to operational leverage [1] - Non-IFRS net profit grew by 33% year-on-year, exceeding market expectations by 4% [1] Analyst Rating - Nomura has adjusted Tencent Music's U.S. stock target price from $30 to $26 while maintaining a "Buy" rating [1]