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Equity Bottom-Up

<ul>
<li>One word to describe <a href="https://www.smartkarma.com/entities/27255" target="_blank" data-smartkarma-citation="entities:27255:1">Tencent Music Entertainment's (TME US)</a> first conference call post IPO is uninspiring.</li>
<li>Management does not provide concrete 2019/1Q19 guidance, but hints margin pressures persist largely due to investments in music contents.</li>
<li>We expect that consensus still has to revise down TME's 2019-20E net profits forecast by 17-26%.</li>
<li>On our earnings forecast, TME unattractively trades at 46.3x/37x 2019-20E PE, a whopping 48-52% premium to peers average.</li>
</ul>


One word to describe Tencent Music Entertainment's (TME US) first conference call post IPO is uninspiring.
Management does not provide concrete 2019/1Q19 guidance, but hints margin pressures persist largely due to investments in music contents.
We expect that consensus still has to revise down TME's 2019-20E net profits forecast by 17-26%.
On our earnings forecast, TME unattractively trades at 46.3x/37x 2019-20E PE, a whopping 48-52% premium to peers average.


Tencent Music: A Case of Failing to Live up to Hyped Expectations