Tencent Music Entertainment Group (TME) has received a new Hold rating, initiated by Bank of America Securities analyst, .
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Merrill Lynch has given its Hold rating due to a combination of factors influencing Tencent Music Entertainment Group’s current market position. The company is a dominant player in China’s music streaming industry, yet its stock valuation appears to be fairly priced, trading at a premium compared to its historical averages and other Chinese internet companies. This premium valuation suggests limited immediate upside potential, especially after the stock’s significant year-to-date increase.
Merrill Lynch also considers the recent acquisition of Ximalaya, a major long-form audio platform, as a potential growth driver for Tencent Music. However, the integration process is expected to take time, and there are competitive risks from other platforms like Bytedance’s Fanqie Changting. While there is potential for revenue growth through increased adoption of premium services and improved margins, the uncertainties surrounding the integration of Ximalaya and competitive pressures contribute to the Hold rating.