External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>TME reported its 3Q22 financial results on 15 Nov.</li><li>Total revenue declined by 5.6% YoY but grew by 6.7% QoQ to RMB7.4bn in 3Q22, largely inline with consensus/CMBI estimate of RMB7.1/7.1bn.</li><li>9M22 revenue was down 11.5% YoY due to the soft performance of social entertainment business.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

TME reported its 3Q22 financial results on 15 Nov.Total revenue declined by 5.6% YoY but grew by 6.7% QoQ to RMB7.4bn in 3Q22, largely inline with consensus/CMBI estimate of RMB7.1/7.1bn.9M22 revenue was down 11.5% YoY due to the soft performance of social entertainment business.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

TME (TME US) – Strong earnings beat on improvement in GPM and operating efficiency

Thematic (Sector/Industry)

<ul><li>For 3Q22E, social entertainment platforms still face intensifying competition and macro challenges that can weigh on their revenue growth and margin expansion.</li><li>Social entertainment platforms need to innovate their monetization methods and enhance operating efficiency in order to fend off competition and macro headwind, in our view.</li><li>Platforms with concentrated revenue exposure to ad business like Weibo and loss-making platforms like BiliBili (Bili) might be more sensitive to the competition and macro environment.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

For 3Q22E, social entertainment platforms still face intensifying competition and macro challenges that can weigh on their revenue growth and margin expansion.Social entertainment platforms need to innovate their monetization methods and enhance operating efficiency in order to fend off competition and macro headwind, in our view.Platforms with concentrated revenue exposure to ad business like Weibo and loss-making platforms like BiliBili (Bili) might be more sensitive to the competition and macro environment.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet– Social Entertainment 3Q22 Preview: Remains Under Pressure

<div><div><div><div><ul><li>Consumption sentiment and offline activities’ recovery pace continued to weigh on internet sector’s 3Q financials performance.</li><li>Looking into 4Q and 2023, business model robustness, operating leverage improvement, and ability to expand into new revenue streams will be the key stock alpha drivers, while the heavily under-owned China Internet sector will remain sensitive to policies and other sentiment related beta drivers.</li><li>We expect leading technology companies will play vital role in building digital infrastructure and empowering enterprise digital transformation. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Consumption sentiment and offline activities’ recovery pace continued to weigh on internet sector’s 3Q financials performance.Looking into 4Q and 2023, business model robustness, operating leverage improvement, and ability to expand into new revenue streams will be the key stock alpha drivers, while the heavily under-owned China Internet sector will remain sensitive to policies and other sentiment related beta drivers.We expect leading technology companies will play vital role in building digital infrastructure and empowering enterprise digital transformation. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Internet Sector – 3Q22 preview: near term bumpy recovery

<ul><li>TME will continue to focus on improving operating efficiency in 2H22 to combat macro uncertainty and intensifying competition in social entertainment sector.</li><li>We forecast total revenue to drop by 11.2% YoY to RMB27.7bn in 2022E, due to the soft performance of social entertainment and ad businesses, before recovering by 7.1/6.5% YoY to RMB29.7/31.7bn in 2023/2024E.</li><li>Although non- IFRS net profit was down by 16.1% YoY to RMB1.9bn in 1H22, we expect non- IFRS net profit to recover to 30.9% YoY to RMB2.4bn in 2H22E, driven by effective cost control initiatives and recovery of core music business.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

TME will continue to focus on improving operating efficiency in 2H22 to combat macro uncertainty and intensifying competition in social entertainment sector.We forecast total revenue to drop by 11.2% YoY to RMB27.7bn in 2022E, due to the soft performance of social entertainment and ad businesses, before recovering by 7.1/6.5% YoY to RMB29.7/31.7bn in 2023/2024E.Although non- IFRS net profit was down by 16.1% YoY to RMB1.9bn in 1H22, we expect non- IFRS net profit to recover to 30.9% YoY to RMB2.4bn in 2H22E, driven by effective cost control initiatives and recovery of core music business.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

TME (TME US) – Resilience in the evolving industry

China

Tencent Music Entertainment operates an online music entertainment platform in China. The Company offers platform that comprises of online music, recording, music-centric live streaming enabling users to discover, listen, sing, watch, perform, and socialize music.

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Tencent Music (TME US)

TME (TME US) – Strong earnings beat on improvement in GPM and operating efficiency

Total revenue declined by 5.6% YoY but grew by 6.7% QoQ to RMB7.4bn in 3Q22, largely inline with consensus/CMBI estimate of RMB7.1/7.1bn.

CMB International

China Internet Sector – 3Q22 preview: near term bumpy recovery

We expect leading technology companies will play vital role in building digital infrastructure and empowering enterprise digital transformation.

CMB International

TME (TME US) – Resilience in the evolving industry

TME will continue to focus on improving operating efficiency in 2H22 to combat macro uncertainty and intensifying competition in social...

CMB International

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

TME (TME US) – Strong earnings beat on improvement in GPM and operating efficiency

Total revenue declined by 5.6% YoY but grew by 6.7% QoQ to RMB7.4bn in 3Q22, largely inline with consensus/CMBI estimate of RMB7.1/7.1bn.

CMB International

China Internet– Social Entertainment 3Q22 Preview: Remains Under Pressure

For 3Q22E, social entertainment platforms still face intensifying competition and macro challenges that can weigh on their revenue growth and...

CMB International

China Internet Sector – 3Q22 preview: near term bumpy recovery

We expect leading technology companies will play vital role in building digital infrastructure and empowering enterprise digital transformation.

CMB International

TME (TME US) – Resilience in the evolving industry

TME will continue to focus on improving operating efficiency in 2H22 to combat macro uncertainty and intensifying competition in social...

CMB International