- Tencent Music‘s 4Q revenue surpassed estimates, reaching 6.89 billion yuan instead of the estimated 6.7 billion yuan.
- The operating income also exceeded expectations, coming in at 1.71 billion yuan against the predicted 1.46 billion yuan.
- Mobile monthly active users for social entertainment were lower than expected at 104 million, instead of the estimated 125.6 million.
- Paying users for online music slightly surpassed estimates, reaching 106.7 million against the predicted 106.09 million.
- Paying users for social entertainment also exceeded estimates, reaching 8.0 million instead of the estimated 7.47 million.
- Monthly ARPPU for online music was slightly higher than expected, at 10.70 yuan instead of the estimated 10.40 yuan.
- Monthly ARPPU for social entertainment was lower than expected, at 78.00 yuan instead of the estimated 83.04 yuan.
- Non-IFRS diluted earnings per ADS also beat estimates, coming in at 1.00 yuan against the predicted 97 RMB cents.
- The strong performance of online music services helped to counterbalance challenges from social entertainment services and contributed to expanded quarterly net profits.
- The company is optimistic about the future, confident in its ability to seize diverse opportunities, thanks to its dual engines of content and platform and the counter-cyclical nature of the online music business.
- Expanded user privileges, AI-empowered products, and tools have positively impacted subscriber conversion and retention.
- CEO of TME, Mr. Ross Liang, acknowledges the company’s efficiency over the year, attributing it to their laser focus on execution.
- As of now, the company has 28 buys, 5 holds, and 0 sells.
Tencent Music on Smartkarma
Tencent Music (TME US) has recently received a positive rating change on Smartkarma, an independent investment research network. According to analyst Ying Pan, TME’s Q3 results have exceeded expectations, thanks to its cost-effective operations and music subscription services. The company is now focusing on monetizing its user base, which has led to an upgrade and a higher target price.
The upgrade to a BUY rating and a target price of US$9.7, as reported by Ying Pan, is based on TME’s shift away from live streaming and towards increasing its average revenue per user (ARPU). This move is expected to reduce the company’s reliance on live streaming and unlock its potential for higher earnings. With a current trading PE ratio of 17.8x, TME’s new target price implies a 21.1x PE ratio in 2024, indicating a positive outlook for the company’s future performance.
A look at Tencent Music Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 3 | |
| Dividend | 1 | |
| Growth | 4 | |
| Resilience | 4 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 3.4 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Tencent Music Entertainment, a leading online music platform in China, has been given a positive outlook for its long-term future according to Smartkarma Smart Scores. The company scored a 3 out of 5 for Value, indicating its potential for growth and profitability. Additionally, the company scored a 4 for both Growth and Resilience, highlighting its ability to adapt and expand in the ever-changing music industry. Its strong Momentum score of 5 further solidifies its position as a top player in the market.
Tencent Music Entertainment’s online platform offers a variety of music-related services, including streaming, recording, and live performances, allowing users to discover, listen, and socialize with music. With a strong overall outlook and a focus on growth and innovation, Tencent Music is well-positioned to continue its success in the Chinese music market for years to come.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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