Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Tencent Music Entertainment (TME) demonstrated a strong performance in the second quarter of 2024, anchored by significant growth in its online music services and a robust increase in adjusted net profit.</li><li>The company reported a 28% year-over-year growth in online music services and a 26% increase in adjusted net profit, signaling robust operational health and profitability.</li><li>The addition of over 10 million music subscribers in the first half of 2024, combined with an increase in average revenue per paying user (ARPPU), underscores the company's effective market penetration and pricing strategy.</li></ul>

Tencent Music Entertainment (TME) demonstrated a strong performance in the second quarter of 2024, anchored by significant growth in its online music services and a robust increase in adjusted net profit.The company reported a 28% year-over-year growth in online music services and a 26% increase in adjusted net profit, signaling robust operational health and profitability.The addition of over 10 million music subscribers in the first half of 2024, combined with an increase in average revenue per paying user (ARPPU), underscores the company's effective market penetration and pricing strategy.

Tencent Music Entertainment Group: Innovation In Subscription & User Experience & Other Major Drivers

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>TME announced 2Q24 results on 13 Aug: total revenue declined by 2% YoY to RMB7.16bn, in line with our/Bloomberg consensus estimate of RMB7.16/7.13bn; non-IFRS net income was up by 22% YoY to RMB1.87bn, 2/2% ahead of our/consensus estimate.</li><li>For 2H24E, management will focus more on balanced growth of music subs and ARPPU, expecting slower music subscriber net adds but continued QoQ ARPPU growth, which has raised certain investor concerns.</li><li>That said, management reiterated its long-term target (150mn music subscribers &amp; RMB15 in monthly ARPPU). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

TME announced 2Q24 results on 13 Aug: total revenue declined by 2% YoY to RMB7.16bn, in line with our/Bloomberg consensus estimate of RMB7.16/7.13bn; non-IFRS net income was up by 22% YoY to RMB1.87bn, 2/2% ahead of our/consensus estimate.For 2H24E, management will focus more on balanced growth of music subs and ARPPU, expecting slower music subscriber net adds but continued QoQ ARPPU growth, which has raised certain investor concerns.That said, management reiterated its long-term target (150mn music subscribers &amp; RMB15 in monthly ARPPU). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

TME (TME US) - Focus on Balanced Growth of Music Subs and ARPPU in 2H24E

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<ul>
<li>We screen for stocks at the extreme ends of their positioning or momentum ranges among active Emerging Market equity funds.</li>
<li>High Positioning, Negative Momentum: BYD Company Limited Class H, Novatek Microelectronics Corp.</li>
<li>Low Positioning, Negative Momentum: Banco Bradesco SA Pfd, LG Chem Ltd.    </li>
</ul>


We screen for stocks at the extreme ends of their positioning or momentum ranges among active Emerging Market equity funds.
High Positioning, Negative Momentum: BYD Company Limited Class H, Novatek Microelectronics Corp.
Low Positioning, Negative Momentum: Banco Bradesco SA Pfd, LG Chem Ltd.    


<ul><li>Tencent Music Entertainment Group, a leading player in China's music streaming industry, started the year 2024 with some substantial financial and operational achievements, reflecting its continued emphasis on a dual-engine strategy of content richness and platform optimization.</li><li>However, not all indicators were uniformly positive, revealing certain challenges and strategic pivots.</li><li>On the upside, Tencent Music reported a marked increase in its subscriber base, adding a record 6.8 million net subscribers during the quarter, which pushes the total count to 113.5 million music-paying users.</li></ul>

Tencent Music Entertainment Group, a leading player in China's music streaming industry, started the year 2024 with some substantial financial and operational achievements, reflecting its continued emphasis on a dual-engine strategy of content richness and platform optimization.However, not all indicators were uniformly positive, revealing certain challenges and strategic pivots.On the upside, Tencent Music reported a marked increase in its subscriber base, adding a record 6.8 million net subscribers during the quarter, which pushes the total count to 113.5 million music-paying users.

Tencent Music Entertainment Group: How Are They Enhancing User Engagement through Artificial Intelligence? - Major Drivers

<ul><li>TME reported 1Q24 results: total revenue declined by 3% YoY to RMB6.77bn, beating consensus estimate by 3% on strong online music revenue growth; non-IFRS net income grew by 21% YoY to RMB1.70bn, 7% ahead of consensus estimate, primarily attributable to the solid GPM expansion (+7.9ppt YoY) and effective control in opex (-8% YoY).</li><li>TME further enhanced shareholder return on its strong cash generation capability and announced its first annual cash dividend of US$0.137 per ADS (c.1.0% dividend yield).</li><li>Looking ahead, we forecast total revenue to decline by 2% YoY, while non-IFRS net income to grow by 20% in 2Q24E on solid music revenue growth and GPM expansion.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

TME reported 1Q24 results: total revenue declined by 3% YoY to RMB6.77bn, beating consensus estimate by 3% on strong online music revenue growth; non-IFRS net income grew by 21% YoY to RMB1.70bn, 7% ahead of consensus estimate, primarily attributable to the solid GPM expansion (+7.9ppt YoY) and effective control in opex (-8% YoY).TME further enhanced shareholder return on its strong cash generation capability and announced its first annual cash dividend of US$0.137 per ADS (c.1.0% dividend yield).Looking ahead, we forecast total revenue to decline by 2% YoY, while non-IFRS net income to grow by 20% in 2Q24E on solid music revenue growth and GPM expansion.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

TME (TME US) - 1Q24 Beat on Strong Music Business Growth and GPM Expansion

China

Tencent Music Entertainment operates an online music entertainment platform in China. The Company offers platform that comprises of online music, recording, music-centric live streaming enabling users to discover, listen, sing, watch, perform, and socialize music.

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Tencent Music (TME US)

Tencent Music Entertainment Group: Innovation In Subscription & User Experience & Other Major Drivers

Tencent Music Entertainment (TME) demonstrated a strong performance in the second quarter of 2024, anchored by significant growth in its online...

Baptista Research

TME (TME US) - Focus on Balanced Growth of Music Subs and ARPPU in 2H24E

TME announced 2Q24 results on 13 Aug: total revenue declined by 2% YoY to RMB7.16bn, in line with our/Bloomberg consensus estimate of RMB7.16/7.13bn

CMB International

GEM Funds: Extreme Stocks, July 2024

We screen for stocks at the extreme ends of their positioning or momentum ranges. We combine current and historical data with recent manager...

Steven Holden

Tencent Music Entertainment Group: How Are They Enhancing User Engagement through Artificial Intelligence? - Major Drivers

Tencent Music Entertainment Group, a leading player in China's music streaming industry, started the year 2024 with some substantial financial and...

Baptista Research

TME (TME US) - 1Q24 Beat on Strong Music Business Growth and GPM Expansion

TME reported 1Q24 results: total revenue declined by 3% YoY to RMB6.77bn, beating consensus estimate by 3% on strong online music revenue growth

CMB International

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