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ADR of TME-SW Crashes 15%; Mkt Raises Concerns Over 2H24/2025 Music Subscription Rev. Guidance Miss

ADRs of TME-SW (01698.HK) slipped in the US trading session, cratering 15.3% to close at US$11.12.

The company announced its 2Q24 results after Hong Kong market close yesterday (13 Aug).

Its quarterly net profit and non-IFRS net profit rose 30% and 23% YoY to RMB1.68 billion and RMB1.87 billion, respectively, but quarterly revenue dipped 1.7% YoY to RMB7.16 billion.

Online monthly active users declined 3.9% YoY to 571 million, while mobile monthly active users plummeted 31.6% YoY to 93 million.

The monthly average revenue per paid user on mobile crashed 46% YoY to RMB73.2.

Daiwa issued a report on TME, downgrading the company's rating from Buy to Hold and axed its target price from HK$66 to HK$46.

Daiwa commented that TME's 2Q24 results were broadly in line with expectations, with non-IFRS net profit beating estimates by 9%.

However, the company's guidance for music subscription revenue growth in 2H24 and next year was weaker than expected, and the broker saw uncertainty about that growth.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

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<Research>G Sachs Trims TME-SW (01698.HK) TP to $55.1; 2Q Results in Line

Goldman Sachs commented in its recent report that TME-SW (01698.HK) delivered 2Q results that were in line with expectations but produced a mixed outlook over 2H24 to 2025.

Management reduced its net adds guidance to 1.5-2 million per quarter from previously 3 million, while aiming to maintain the group's revenue target by boosting its monthly average revenue per paying user (ARPPU) through higher-priced super VIP (SVIP) services.

Although Goldman Sachs predicted that the shift in TME-SW's growth momentum may worry some investors about multiple contractions, it still believed that TME-SW's risk/reward is skewed to the upside and was optimistic about its long-term growth prospects.

The broker lowered its 2024-2026 revenue forecasts by 3%-7% and the TP by 11% to $55.1, with a Buy rating remaining in place.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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<Research>M Stanley Trims Tencent Music Entertainment Group (TME.US) TP to US$15, Lowers EPS Forecasts

Morgan Stanley released a research report lowering its 2024-2026 EPS forecasts for Tencent Music Entertainment Group (TME.US) and trimming its target price from US$19 to US$15, by assuming a net addition of 2 million subscribers per quarter from 2H24, compared with the original net addition of over 3 million subscribers, partially offset by higher ARPPU and improved margins.

Morgan Stanley kept rating at Overweight, and anticipated a 20% CAGR in EPS from 2024 to 2026, with less macro environment and competitive risk than most other verticals.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

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Mizuho cuts Tencent Music stock price target on competition concerns

Investing.com - Mizuho lowered its price target on Tencent Music Entertainment Group (NYSE:TME) to $23 from $28 while maintaining an Outperform rating.

The stock currently trades at $11.37, near its 52-week low of $11.33, down 57% over the past six months.

Analyst Wei Fang cited uncertainties around competition and artificial intelligence weighing on the stock price.

The firm noted Tencent Music’s dilemma between near-term operating metrics and strategic execution.

Management acknowledged music subscription headwinds from competition and updated its disclosure decision.

The company is matching prices and integrating more value-add features to membership to appeal to light music users, which will pressure near-term margins.

Mizuho said the company is tackling these challenges in a more serious manner.

The firm views Tencent Music as well-positioned for music subscription and music-centric services as the category leader in streaming and music ecosystem.

The price target reduction reflects execution uncertainties, even as Mizuho believes the strategic moves are necessary for the company’s competitive position.

In other recent news, Tencent Music Entertainment Group reported its fourth-quarter 2025 financial results, showing a mixed performance.

The company achieved revenue of 8.64 billion CNY, surpassing expectations of 8.44 billion CNY, which is a 2.37% surprise.

However, earnings per share (EPS) fell short at 1.41 CNY compared to the forecasted 1.54 CNY, marking an 8.44% miss.

Online music revenue rose 22% year-over-year to 7.1 billion yuan, and adjusted net profit increased by 8% year-over-year to 2.6 billion yuan.

Music subscription revenue also saw growth, reaching 4.6 billion yuan, up 13% year-over-year, with 1.7 million net subscriber additions.

Despite these gains, Macquarie and Jefferies both lowered their price targets for Tencent Music, citing competitive pressures.

Macquarie adjusted its target to $10.70 from $14.10, maintaining a Neutral rating, while Jefferies set a new target of $23.00, down from $28.00, but continued with a Buy rating.

Management emphasized the growth potential in non-subscription revenue and the benefits of their multi-tier music memberships.

Source: investing.com

https://www.investing.com/news/analyst- ... CH-4567163

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Jefferies cuts Tencent Music stock price target on competition concerns

Investing.com - Jefferies lowered its price target on Tencent Music Entertainment Group shares (NYSE:TME) to $23.00 from $28.00 while maintaining a Buy rating on the stock.

The stock currently trades at $11.95, near its 52-week low of $11.71, presenting a potential opportunity as InvestingPro analysis suggests the company is undervalued with a Fair Value of $19.65.

The company’s attractive valuation is further supported by a PEG ratio of just 0.18, indicating the stock trades at a low price relative to its earnings growth potential.

The firm issued the revised price target following Tencent Music’s fourth-quarter results. Management highlighted that the company’s multi-tier music memberships serve the needs of different users while non-subscription revenue is expected to maintain fast growth.

Jefferies noted that in 2026, Tencent Music is expected to invest in content, IP development, top music studios and artists amid industry competition. The analyst firm stated that AI transforms the music sector and lowers the entry barrier for content creators.

Management is committed to returning value to shareholders, according to the company. Tencent Music operates online music entertainment platforms in China, offering music streaming and social entertainment services.

The price target reduction reflects the competitive environment facing the company as it continues to invest in content and technology development.

Source: investing.com

https://www.investing.com/news/analyst- ... CH-4566163

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Macquarie lowers Tencent Music stock price target on competition

Investing.com - Macquarie lowered its price target on Tencent Music Entertainment Group (NYSE:TME) to $10.70 from $14.10 while maintaining a Neutral rating on the stock.

The company reported fourth-quarter 2025 results largely in line with expectations.

Online music revenue rose 22% year-over-year to 7.1 billion yuan, while adjusted net profit increased 8% year-over-year to 2.6 billion yuan.

Music subscription revenue reached 4.6 billion yuan, up 13% year-over-year, driven by 1.7 million net subscriber additions, though average revenue per paying user remained flat quarter-over-quarter.

Trading at a P/E ratio of 11.3, InvestingPro analysis suggests the stock appears undervalued, with a Financial Health Score rated as "GREAT."

The total number of SVIP members exceeded 20 million by the end of 2025, representing about 15.7% of paying users.

Non-subscription revenue, including advertising, concerts and artist merchandise, reached 2.5 billion yuan in the fourth quarter, up 41% year-over-year.

Revenue from IP-related merchandise and fan-based consumption more than doubled in 2025, according to management.

Year-over-year growth in paying users decelerated to a record low of 5% in the fourth quarter of 2025.

Macquarie said on March 5 that Tencent Music faces intensifying competition that could hinder the growth of paying users and limit potential average revenue per paying user upside.

Macquarie models adjusted net profit growth of 12% in 2026, citing the solid non-subscription segment and rising competition.

The firm said AI-generated music could take more user traffic away from human-generated music, and new businesses could require more front-loaded investments.

Source: investing.com

https://www.investing.com/news/analyst- ... CH-4566529

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Earnings call transcript: Tencent Music Q4 2025 misses EPS, stock drops

Key Takeaways
Tencent Music’s revenue grew by 16% year-over-year in Q4 2025.
The company missed EPS expectations by 8.44%, impacting investor sentiment.
Non-subscription music service revenues surged by 41% year-over-year.
The effective tax rate stood at a high 70.5%.

The company saw significant expansion in its non-subscription music service revenues, which grew by 41% year-over-year, making it the fastest-growing segment.

Risks and Challenges
High effective tax rate impacting net profitability.
Declining revenues in social entertainment services.
Potential market saturation in the music streaming sector.
Increased competition from global music streaming platforms.
Regulatory changes affecting digital music services in China.

Source: investing.com

https://www.investing.com/news/transcri ... CH-4565737

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Tencent Music Entertainment poses 66.4pc net profit growth to 11.06b yuan

2025 net profit grew 66.4 percent year on year to 11.06 billion yuan (HK$13.07 billion) as it saw gains in the deemed disposal of an associate in the first quarter of 2025.

Its adjusting net profit grew 25 percent year on year to 9.59 billion yuan.

The company's total revenue increased 15.8 percent to 32.9 billion yuan; its revenue from online music services also rose 22.9 percent to 26.73 billion yuan, but revenue from social entertainment services and others dropped 7.3 percent to 6.18 billion yuan.

Its business model has evolved to advertising and other IP-related offering scale and multi-tiered membership for online music subscriptions.

Source: The Standard

https://www.thestandard.com.hk/finance/article/326943/

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<Research>Citi Expects TME-SW (01698.HK) 4Q25 Results to Be In Line or Slightly Beat

Citi Research issued a research report anticipating that TME-SW (01698.HK)'s 4Q25 results will be in line with expectations or slightly beat forecasts, primarily due to stable subscription services and accelerated growth in non-subscription music revenue.

Looking ahead to 2026, the broker believed that the key focuses include the competitive landscape and potential threats from Douyin's Soda Music, SVIP conversion rates and average revenue per user (ARPU) trends, online advertising revenue, updates on music concert income, the latest status of Himalaya, and trends in GPM and operating profit margins.

Related NewsTME-SW Annual NP Spikes 66.4% to RMB11.06B; Final Div. US12 Cents

Although Citi Research believed that the rapid growth of Soda Music's user metrics may not directly impact TME-SW's core user base in the short term, competitive concerns will continue to suppress share price performance.

Furthermore, the latest progress in AI integration, and how AI technology facilitates or disrupts music creation and changes in user behavior, are important trends to watch.

Therefore, the broker kept rating at Buy on TME-SW's US stock, with a target price of US$29.

AASTOCKS Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

vested

4Q25: Solid Earnings; Focusing On AI Disruptions And Competition From Peers

TME delivered strong 4Q25 results with both top-line and bottom line beating our expectations.

Revenue grew 15.9% yoy to Rmb8.6b, 3% above the street’s estimates.

Non-GAAP operating profit increased 14.6% yoy to Rmb3.2b, with operating margins flat yoy at 37%.

Non-GAAP net profit rose 7.6% yoy to Rmb2.6b, 4-5% ahead of our and consensus expectations, with net margin shrinking 2ppt yoy to 30%.

Maintain BUY with a lower target price of HK$72.00 (US$20.00).

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email