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Tencent Music Entertainment Group Class A
(1698)
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Rating:73Outperform
Price Target:
HK$39.00
▲(14.30% Upside)
Action:Reiterated
Date:08/19/26
The score is driven primarily by solid financial performance (strong profitability and improved growth) and attractive valuation (low P/E plus dividend yield). These positives are tempered by weaker technicals (below major moving averages and negative MACD) and earnings-call guidance pointing to modest near-term margin pressure despite ongoing buybacks and steady operating progress.
Positive Factors
Strong Revenue Growth and Profitability
Accelerating revenue and high profitability show that TME is scaling its platforms while retaining meaningful earnings power. This provides financial capacity to invest in content, technology and ecosystem expansion over the next several quarters.
Negative Factors
Margin and Operating Expense Pressure
Higher consolidation amortization, channel spending and an unfavorable revenue mix are reducing operating leverage. Management expects gross and net margins to edge down, which could limit earnings growth even if revenue continues expanding.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong Revenue Growth and Profitability
Accelerating revenue and high profitability show that TME is scaling its platforms while retaining meaningful earnings power. This provides financial capacity to invest in content, technology and ecosystem expansion over the next several quarters.
Read all positive factors
Tencent Music Entertainment Group Class A (1698) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$98.06B
Dividend Yield2.99%
Average Volume (3M)1.89M
Price to Earnings (P/E)9.4
Beta (1Y)1.34
Revenue Growth16.05%
EPS Growth-6.93%
CountryHK
Employees5,690
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)2.86
Shares Outstanding1,636,655,000
10 Day Avg. Volume1,054,937
30 Day Avg. Volume1,893,585
Financial Highlights & Ratios
PEG Ratio0.28
Price to Book (P/B)2.37
Price to Sales (P/S)5.93
P/FCF Ratio19.25
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
HK$47.93Price Target Upside40.48% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)3.4
Revenue Forecast (FY)HK$41.10B
Tencent Music Entertainment Group Class A Business Overview & Revenue Model
Company Description
Tencent Music Entertainment Group (TME) is a prominent digital music and entertainment provider within the People's Republic of China, delivering a comprehensive suite of services including music streaming, online karaoke, and interactive live per...
How the Company Makes Money
TME primarily makes money through two major revenue streams: (1) online music services and (2) social entertainment services.
1) Online music services (subscription and related monetization)
- Music subscriptions: TME sells paid memberships that ...
Tencent Music Entertainment Group Class A Earnings Call Summary
Earnings Call Date:Aug 11, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 17, 2026
Earnings Call Sentiment Positive
The call presented steady, constructive operational and financial progress: revenue grew 6% YoY with stronger music-related (11%) and membership (8%) performance, improved adjusted EBITDA (+5%), expanding cash balance and active share repurchases. Strategic moves—most notably the consolidation of Ximalaya, deeper Tencent ecosystem integrations, product innovations (AI, 3D audio) and robust IP-driven offline and merchandise growth—support a long-term growth thesis. Offsetting these positives are near-term challenges: advertising headwinds, slight gross-margin pressure from revenue mix, higher operating/sales expense ratios (partly from consolidation amortization), and competition moderating light-user growth. Overall, highlights materially outweigh the lowlights, reflecting positive momentum but with cautious margin and competitive considerations.Positive Updates
Overall Revenue Growth
Total revenues were RMB 8.9 billion in Q2 2026, up 6% year-over-year, with consolidation contributing ~RMB 0.4 billion to revenues.
Negative Updates
Advertising Business Headwinds
The advertising/ad-supported model experienced headwinds in a challenging macro and competitive environment; management is working to improve ad exposure, reach and engagement but near-term ad revenue growth was constrained.
Read all updates
Q2-2026 Updates
Positive
Negative
Overall Revenue Growth
Total revenues were RMB 8.9 billion in Q2 2026, up 6% year-over-year, with consolidation contributing ~RMB 0.4 billion to revenues.
Read all positive updates
Company Guidance
Management’s guidance emphasizes prioritizing SVIP membership growth, continued investment in premium content/IP and deeper Tencent‑ecosystem integration while dynamically adjusting channel spend; key metrics they cited: Q2 revenue RMB 8.9bn (+6% YoY) including ~RMB 0.4bn from consolidation, music‑related services +11% YoY, membership revenue RMB 4.8bn (+8% YoY), adjusted EBITDA RMB 3.3bn (+5% YoY), IFRS net profit RMB 2.7bn (+4% YoY) and net profit attributable RMB 2.5bn (vs RMB 2.4bn), diluted EPS ~RMB 1.7 per ADS, gross margin 44.2% (44.4% a year ago) which management expects to decline slightly YoY into H2, operating expenses RMB 1.3bn (14.5% of revenue vs 13.7% a year ago) expected to rise modestly, cash and short‑term investments RMB 44.2bn (vs RMB 41.0bn Mar‑31), and a Q2 buyback of 43.5m shares for USD 400m under the ~USD 1bn repurchase program (on track to complete); overall guidance: modest near‑term margin pressure but EBITDA to edge up as content/IP and SVIP initiatives drive longer‑term revenue and engagement.Tencent Music Entertainment Group Class A Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
74
Positive
Cash Flow
69
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 33.70B | 32.05B | 28.40B | 27.75B | 28.34B | 31.24B |
| Gross Profit | 15.93B | 18.27B | 12.03B | 9.79B | 8.77B | 9.40B |
| EBITDA | 12.32B | 14.40B | 9.81B | 7.17B | 5.65B | 4.75B |
| Net Income | 8.86B | 10.77B | 6.64B | 4.92B | 3.68B | 3.03B |
Balance Sheet | ||||||
| Total Assets | 116.93B | 102.57B | 90.44B | 75.54B | 67.01B | 67.25B |
| Cash, Cash Equivalents and Short-Term Investments | 30.66B | 24.34B | 27.21B | 23.54B | 20.88B | 20.43B |
| Total Debt | 16.88B | 3.81B | 6.05B | 6.05B | 5.96B | 5.36B |
| Total Liabilities | 35.87B | 19.48B | 20.72B | 18.33B | 17.88B | 16.20B |
| Stockholders Equity | 78.26B | 80.32B | 67.86B | 55.91B | 48.10B | 50.32B |
Cash Flow | ||||||
| Free Cash Flow | 8.88B | 9.88B | 9.24B | 6.17B | 6.43B | 2.48B |
| Operating Cash Flow | 11.47B | 10.17B | 10.28B | 7.34B | 7.48B | 5.24B |
| Investing Cash Flow | -3.71B | -10.28B | -6.82B | -1.86B | -1.45B | -6.00B |
| Financing Cash Flow | 5.23B | -4.41B | -3.83B | -1.54B | -3.42B | -3.71B |
Tencent Music Entertainment Group Class A Technical Analysis
Negative
34.12
Price Trends
35.03
Negative
35.32
Negative
47.17
Negative
Market Momentum
-0.91
Positive
32.45
Neutral
8.83
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1698, the sentiment is Negative. The current price of 34.12 is above the 20-day moving average (MA) of 33.51, below the 50-day MA of 35.03, and below the 200-day MA of 47.17, indicating a bearish trend. The MACD of -0.91 indicates Positive momentum. The RSI at 32.45 is Neutral, neither overbought nor oversold. The STOCH value of 8.83 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:1698.
Tencent Music Entertainment Group Class A Risk Analysis
Tencent Music Entertainment Group Class A disclosed 101 risk factors in its most recent earnings report. Tencent Music Entertainment Group Class A reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
The AI industry faces changing and extensive regulations. Integrating AI into our offerings could lead to potential infringement claims and higher costs for regulatory compliance. Q4, 2023
Tencent Music Entertainment Group Class A Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | HK$5.15B | 12.00 | 3.92% | 5.12% | -6.86% | 379.60% | |
73 Outperform | HK$98.06B | 9.43 | 11.23% | 2.99% | 16.05% | -6.93% | |
69 Neutral | HK$12.82B | 5.01 | 8.15% | 9.09% | 1.85% | -14.40% | |
66 Neutral | HK$144.28B | 7.62 | 19.76% | 3.56% | 11.31% | 0.14% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
54 Neutral | HK$1.87B | 10.37 | 2.82% | 5.15% | -23.74% | -54.08% | |
48 Neutral | HK$715.57M | 5.08 | 5.71% | 11.85% | 5.67% | ― |
* Communication Services Sector Average
HK:1698
Tencent Music Entertainment Group Class A
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Tencent Music Entertainment Group Class A Corporate Events
Tencent Music Sets Date for Second-Quarter 2026 Earnings Announcement
Jul 14, 2026
Tencent Music Entertainment Group has notified investors that it has furnished a Form 6-K to the U.S. Securities and Exchange Commission announcing the date for its second-quarter 2026 earnings release. The Hong Kong-listed and NYSE-traded company...
Tencent Music Sets August Dates to Approve and Release Q2 2026 Results
Jul 14, 2026
Tencent Music Entertainment Group has announced that its board of directors will meet on August 10, 2026 to review and vote on the company’s unaudited financial results for the three and six months ended June 30, 2026. The move underscores t...
Tencent Music Files U.S. Form 6-K on 2026 AGM Poll Results
Jun 30, 2026
Tencent Music Entertainment Group announced an overseas regulatory filing linked to its Hong Kong listing, disclosing that it has submitted a Form 6-K current report to the U.S. Securities and Exchange Commission. The filing includes information o...
Tencent Music Shareholders Approve All Resolutions at 2026 AGM
Jun 30, 2026
Tencent Music Entertainment Group announced that all resolutions proposed in its notice of the 2026 annual general meeting were duly approved at the meeting held on June 30, 2026. The board, led by Executive Chairman Cussion Kar Shun Pang and incl...
Tencent Music Issues Shares for Ximalaya Deal, Files U.S. Form D
Jun 1, 2026
Tencent Music Entertainment Group has disclosed that it delivered Class A ordinary shares to a U.S. shareholder of Ximalaya Inc. as part of the consideration for its recently completed acquisition of the audio platform. The move underscores Tencen...
Tencent Music Names New Hong Kong Process Agent for Legal Notices
Jun 1, 2026
Tencent Music Entertainment Group has announced a change to its authorized representative for accepting legal process and notices in Hong Kong, as required under local listing rules and company law. With effect from June 1, 2026, Mr. Lee Leong Yin...
Tencent Music Files Form 6-K Ahead of Forthcoming Annual General Meeting
May 20, 2026
Tencent Music Entertainment Group has notified investors that it filed a Form 6-K with the U.S. Securities and Exchange Commission on May 20, 2026, in connection with its forthcoming annual general meeting. The filing includes the AGM notice and v...
Tencent Music Sets June 2026 AGM to Vote on Auditor and Governance Overhaul
May 20, 2026
Tencent Music Entertainment Group has called its annual general meeting for June 30, 2026 in Hong Kong, where shareholders will review the company’s 2025 financial statements and address key governance items. The meeting underscores the grou...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.