Core Viewpoint - The report from CICC indicates that Tencent Music (01698) is expected to see significant growth in new business in 2025, with projected Non-IFRS net profits of 9.63 billion yuan and 10.75 billion yuan for 2025 and 2026 respectively, maintaining an outperform rating in the industry [1] Group 1: Financial Performance - In Q3 2025, Tencent Music reported revenues of 8.46 billion yuan, a year-on-year increase of 20.6%, and Non-IFRS net profit of 2.41 billion yuan, up 32.6%, slightly exceeding CICC's expectations [2] - The company’s online music subscription revenue in Q3 2025 grew by 17.2% to 4.49 billion yuan, with a net increase of 1.3 million paying users, reaching a total of 126 million [3] Group 2: Business Segments - The subscription business shows profitability resilience, while non-subscription business demonstrates growth potential, with non-subscription revenue in Q3 2025 increasing by 50.3% to 2.48 billion yuan, driven by concert and artist economy revenues [3] - The company expects a continued increase in paid users and ARPPU, projecting a rise to 12.1 yuan/month in Q4 2025 [3] Group 3: Margin and Investment - Q3 2025 gross margin was 43.5%, with stable sales expenses and a 5.3% year-on-year increase in management expenses; the company is investing in offline performances and IP economy, which may impact short-term margins but is expected to support long-term growth [4] - The fluctuation in gross margin is attributed to the rising proportion of concert-related revenues, with expectations for a rebound in Q4 2025 [4] Group 4: Strategic Direction - The company is committed to a dual-wing strategy, focusing on deepening collaborations with global record labels and enhancing its own IP matrix, while innovating product features and services to expand multi-terminal scenarios [5] - Content payment, content privileges, and functional privileges are identified as key growth drivers, with the potential for increased commercial advantages through deeper value extraction from the music entertainment industry [5]

Core Viewpoint - The report from Jefferies indicates that Tencent Music (01698) is on track to meet its revenue and non-IFRS profit forecasts for Q3, driven by quality growth and SVIP services, with a "Buy" rating maintained [1] Group 1: Revenue and Profit Forecasts - Tencent Music is expected to achieve total revenue of 8.2 billion RMB in Q3, representing a year-on-year growth of 17% [1] - The company is projected to have a gross profit of approximately 3.59 billion RMB, with a gross margin reaching 43.8% [1] - Other revenue is anticipated to grow by 35% year-on-year, estimated at 2.2 billion RMB [1] Group 2: User Growth and Subscription Services - The forecast for the music subscription business includes a net addition of approximately 1.3 million users in Q3 [1] - The average revenue per user (ARPU) for the quarter is expected to be 11.9 RMB [1] Group 3: Key Growth Areas - The report highlights key growth areas such as SVIP service upgrades, fan economy potential, and the development of offline concerts [1]

Core Viewpoint - Tencent Music (NYSE: TME) continues to show a trend of fundamental divergence, with strong growth in online music services offset by weakness in social entertainment, leading to a cautious outlook on the stock [1] Group 1: Financial Performance - Music subscription revenue increased by 18% year-on-year to RMB 4.03 billion, driven by a 13% growth in paid user numbers and gradual ARPU improvement [2] - Social entertainment revenue declined by 13% year-on-year to RMB 1.6 billion due to adjustments in live interaction features and stricter compliance procedures [2] - Projected revenue for 2026 is expected to reach RMB 29.33 billion, with a target multiple of 5.0x, resulting in an implied value of approximately USD 13 per share, reflecting a 10% downside from current levels [5][6] Group 2: User Engagement and Content Strategy - Tencent Music is enhancing platform stickiness to support future ARPU growth, expanding its content library through partnerships with SM Entertainment and Kakao Entertainment [3] - The company is investing in application optimization and AI-driven recommendations, resulting in a 10% increase in user playlists and improved sound quality [3] - SVIP membership numbers are steadily increasing, with enhanced features like high-definition online concerts and an expanded digital library attracting more users [3][4] Group 3: Market Outlook and Valuation - Given the structural decline in social entertainment, Tencent Music's valuation should be based solely on its music subscription and advertising business [4] - Future growth expectations include an 11% CAGR in paid users and a 5% CAGR in ARPU over the next two years, with advertising revenue expected to grow at a 15% CAGR [4][6] - The company is also exploring partnerships for in-car music services, which could drive user growth as the automotive market shifts towards high-tech electric vehicles [4]