Investment Rating - The report maintains a "Buy" rating for the company, with a target price of $16.00 based on discounted cash flow (DCF) valuation methods [11][19]. Core Insights - The company reported a total revenue of RMB 7.02 billion for Q3 2024, a year-on-year increase of 7%, aligning with consensus expectations. Non-IFRS net profit grew by 29% to RMB 1.81 billion, also meeting expectations [1][2]. - The SVIP subscription service has reached a milestone of 10 million users, which is expected to drive future growth in music ARPPU (average revenue per paying user) and overall revenue [1][4]. - Online music revenue increased by 20% year-on-year to RMB 5.48 billion, supported by robust growth in both subscription and non-subscription revenues [1][4]. Revenue Summary - Total revenue for FY24E is projected to be RMB 28.25 billion, with a forecasted growth of 6% for Q4 2024, reaching RMB 7.31 billion [4][10]. - The online music segment is expected to see a 15% increase in revenue for Q4 2024, while social entertainment revenue is anticipated to decline by 17% [4][10]. Profitability Metrics - The gross profit margin (GPM) for Q3 2024 was reported at 42.6%, a year-on-year increase of 6.9 percentage points, attributed to strong growth in music ARPPU and advertising revenue [2][10]. - The non-IFRS net profit margin for Q3 2024 expanded to 25.9%, up 4.4 percentage points year-on-year [2][10]. User Growth and Engagement - The number of paying users increased by 2 million quarter-on-quarter to 119 million, representing a 16% year-on-year growth [1][4]. - The monthly ARPPU for Q3 2024 was RMB 10.8, reflecting a 4% year-on-year increase [1][4]. Financial Forecasts - For FY25E, the company expects further expansion in profit margins, with GPM projected to reach 44.5% and non-IFRS net profit margin at 28.2% [10][12]. - The adjusted net profit for FY25E is forecasted to be RMB 8.79 billion, with a continued focus on balanced growth in music subscription users and ARPPU [10][12]. Market Performance - The company's market capitalization is approximately $17.8 billion, with a 52-week high of $15.49 and a low of $7.43 [5][6]. - The stock has underperformed in the short term, with a 1-month decline of 9.6% and a 6-month decline of 13.4% [6][6].

Investment Rating - The report maintains a "BUY" rating for the company with a target price of US$16.00, indicating a potential upside of 38.5% from the current price of US$11.55 [3][7]. Core Insights - The company reported inline 3Q24 results with total revenue increasing by 7% YoY to RMB7.02 billion and non-IFRS net income growing by 29% YoY to RMB1.81 billion, both in line with estimates [1]. - The number of SVIP subscribers reached 10 million in September 2024, expected to drive future growth in music ARPPU and revenue [1]. - For FY25E, management anticipates accelerated revenue growth and margin improvement, supported by balanced growth in music subscribers and ARPPU [1]. Revenue and Profitability - Total revenue for FY24E is projected at RMB28.254 billion, with a growth forecast of 10.4% for FY25E to RMB31.193 billion and 10.2% for FY26E to RMB34.364 billion [2][4]. - Gross margin is expected to improve from 42.3% in FY24E to 44.5% in FY25E and 45.5% in FY26E, reflecting strong operating leverage and optimized content costs [4][12]. - Non-IFRS net profit is forecasted to grow from RMB7.332 billion in FY24E to RMB8.785 billion in FY25E and RMB10.297 billion in FY26E [2][4]. Online Music Business Performance - Online music revenue increased by 20% YoY to RMB5.48 billion in 3Q24, driven by both subscription and non-subscription revenue growth [1]. - The number of paid users rose by 2 million QoQ to 119 million in 3Q24, with monthly ARPPU increasing by 4% YoY to RMB10.8 [1][6]. - Advertising revenue showed strong growth in 3Q24, supported by ad-supported models and interactive ads [1]. Future Outlook - For 4Q24E, total revenue is expected to rise by 6% YoY to RMB7.31 billion, with online music revenue projected to grow by 15% YoY [1]. - The company plans to control promotion discounts for music subscriptions and drive further SVIP adoption, which is anticipated to support balanced growth in subscribers and ARPPU in FY25E [1]. - Management expects further margin expansion in FY25E, with gross margin projected to reach 43.3% and non-IFRS net margin at 27.0% [1][4].

Financial Data and Key Metrics - The company announced its quarterly financial results before the U.S. market opened, and the earnings release is available on the IR website and via Newswire services [1] Business Line Data and Key Metrics - No specific data or metrics related to individual business lines were provided in the content Market Data and Key Metrics - No specific data or metrics related to individual markets were provided in the content Company Strategy and Industry Competition - The Executive Chairman and CEO will provide an overview of the company's strategies and business updates during the call [2] Management Commentary on Operating Environment and Future Outlook - No specific commentary on the operating environment or future outlook was provided in the content Other Important Information - The call includes forward-looking statements, and non-IFRS measures will be discussed, with explanations and reconciliations provided in the earnings release and SEC filings [3] - The call is being recorded, and participants are currently muted [4] Q&A Session Summary - No Q&A session details were provided in the content

Core Viewpoint - Investors in the Internet - Content sector should consider Tencent Music Entertainment Group (TME) and TechTarget (TTGT) for potential value opportunities, with TME currently presenting a more attractive option [1]. Valuation Metrics - TME has a forward P/E ratio of 17.32, while TTGT has a forward P/E of 18.32, indicating TME may be undervalued compared to TTGT [5]. - TME's PEG ratio is 0.80, suggesting a favorable growth outlook, whereas TTGT's PEG ratio is significantly higher at 10.29 [5]. - TME's P/B ratio stands at 2.34, compared to TTGT's P/B of 3.57, further supporting TME's valuation attractiveness [6]. Earnings Estimates - TME holds a Zacks Rank of 2 (Buy), reflecting positive revisions in earnings estimates, while TTGT has a Zacks Rank of 3 (Hold), indicating a less favorable earnings outlook [3][7]. - The stronger estimate revision activity for TME suggests a more promising earnings trajectory compared to TTGT [7]. Value Grades - TME has a Value grade of B, while TTGT has a Value grade of D, highlighting TME's superior valuation metrics and overall investment appeal [6][7].

Shares of Tencent Music Entertainment Group Sponsored ADR (TME) have gained 2.8% over the past four weeks to close the last trading session at $11.59, but there could still be a solid upside left in the stock if shortterm price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $14.70 indicates a potential upside of 26.8%. The average comprises 15 short-term price targets ranging from a low of $10.50 to a high of $18, with a standard deviation of $2.01. Whil ...

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a growth stock that can live up to its true potential can be a tough task. In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end. However, the Zacks Growth Style Score (part of the Zacks Style Scores ...

Investors interested in stocks from the Internet - Content sector have probably already heard of Tencent Music Entertainment Group Sponsored ADR (TME) and TechTarget (TTGT) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look. We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis o ...

Shares of Tencent Music Entertainment Group (TME, Financial) surged 6.00% in mid-day trading on Oct 2. The stock reached an intraday high of $14.05, before settling at $13.52, up from its previous close of $12.75. This places TME 14.30% below its 52-week high of $15.77 and 121.92% above its 52-week low of $6.09. Trading volume was 9,970,213 shares, 88.6% of the average daily volume of 11,256,975.Wall Street Analysts ForecastBased on the one-year price targets offered by 27 analysts, the average target price ...

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a great growth stock is not easy at all.In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond ...

Investors interested in Internet - Content stocks are likely familiar with Tencent Music Entertainment Group Sponsored ADR (TME) and Airbnb, Inc. (ABNB) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revisi ...