China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

[Tencent Music (TME US) Target Price Change]: Cut TP as Offline Music Activities Begin to Thrive

[Tencent Music (TME US, SELL, TP US$6) Preview]: Competition Is Still a Concern, Maintain SELL

China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>TME reported in-line results with continued divergence in its two major businesses: Online music increased by 48% YoY, while social entertainment declined by 25% YoY.</li>
<li>We expect these trends to continue, with online music benefiting from price increases and social entertainment facing ongoing challenges from competition, regulations, and macro influences.</li>
<li>Recently, Douyin has been advancing the integration of its large entertainment division. We anticipate that this will pose pressure on TME. Remain SELL and cut TP to US$ 5.7.</li>
</ul>


TME reported in-line results with continued divergence in its two major businesses: Online music increased by 48% YoY, while social entertainment declined by 25% YoY.
We expect these trends to continue, with online music benefiting from price increases and social entertainment facing ongoing challenges from competition, regulations, and macro influences.
Recently, Douyin has been advancing the integration of its large entertainment division. We anticipate that this will pose pressure on TME. Remain SELL and cut TP to US$ 5.7.


[Tencent Music (TME US, SELL, TP US$5.7) TP Change]: Competition Remains the Biggest Downward Factor