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, SELL, TP US$6) Preview]: Competition Is Still a Concern, Maintain SELL

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

[Tencent Music (TME US) Target Price Change]: Cut TP for Competition Pressure and Cost Rebound

China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>TME reported 1Q23 results with topline beat our est. by 5.0% and bottom line beat our est. by 25.2%, due to cost-saving measures. </li>
<li>As more offline entertainment activities resume after reopening, it would adversely impact both its online music and social entertainment segments. </li>
<li>Maintain SELL and cut TP to US$ 6.0 to reflect concert impact and limited catalysts, which implies 12.5X PE in 2023.</li>
</ul>


TME reported 1Q23 results with topline beat our est. by 5.0% and bottom line beat our est. by 25.2%, due to cost-saving measures. 
As more offline entertainment activities resume after reopening, it would adversely impact both its online music and social entertainment segments. 
Maintain SELL and cut TP to US$ 6.0 to reflect concert impact and limited catalysts, which implies 12.5X PE in 2023.


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