In a report released today, Saiyi HE from CMB International Securities maintained a Buy rating on Tencent Music Entertainment Group (TME – Research Report), with a price target of $16.00.
Saiyi HE has given his Buy rating due to a combination of factors indicating strong financial health and future growth potential for Tencent Music Entertainment Group (TME). The analyst’s confidence is underpinned by TME’s recent quarter performance that surpassed expectations, with notable growth in online music revenue and solid gross profit margin (GPM) expansion. Moreover, the company has successfully controlled its operating expenses and demonstrated robust cash generation capabilities, leading to the announcement of its first annual cash dividend, which suggests a favorable outlook for shareholder returns.
The positive assessment also takes into account TME’s subscriber growth, which exceeded forecasts, and the increase in average revenue per paying user (ARPPU). Growth in music subscription and advertising revenues were significant contributors to the company’s strong financial results. Looking ahead, Saiyi HE expects the momentum in online music revenue growth to continue, aided by product innovations and effective monetization strategies. Additionally, the expected GPM expansion and the company’s proactive measures to enhance shareholder value—such as share buybacks and the initiation of a dividend payout—further justify the analyst’s Buy rating.
HE covers the Communication Services sector, focusing on stocks such as Baidu, Meta Platforms, and NetEase. According to TipRanks, HE has an average return of 16.8% and a 70.13% success rate on recommended stocks.
In another report released today, Benchmark Co. also maintained a Buy rating on the stock with a $19.00 price target.
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Tencent Music Entertainment Group (TME) Company Description:
Incorporated in 2012, China-based Tencent Music Entertainment Group is an online music entertainment platform that provides music streaming, online karaoke, and live streaming services services. The company is a subsidiary of Tencent Holdings Limited.
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