In major news on Hong Kong stocks, Tencent Music Entertainment Group (HK:1698) (NYSE:TME) gained 4.08% today after the company’s Q1 revenue exceeded analysts’ estimates, driven by higher paid subscriptions and advertising services. The company recorded revenue of ¥6.77 billion (about $937 million) in the first quarter, surpassing analysts’ projected revenue of ¥6.63 billion. However, revenue marked a year-over-year decline of 3.4%, dragged down by its social entertainment services.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
TME is China’s leading online music entertainment platform, providing services through popular mobile apps like QQ Music, Kugou Music, Kuwo Music, and WeSing. It operates as a subsidiary of the Chinese multinational technology conglomerate Tencent Holdings Limited (HK:0700) (TCEHY).
Tencent Music’s Q1 Earnings Roundup
Tencent Music’s Q1 performance was primarily driven by its music subscription business. Music subscription revenues amounted to ¥3.62 billion ($501 million), marking a 39.2% year-over-year increase. The paying user base grew by 20.2% year-over-year to reach 113.5 million. Additionally, there was a sequential increase of 6.8 million paying users, the largest quarterly net increase observed to date. Consequently, the overall revenues from online music services saw a robust year-over-year increase of 43% in Q1.
On the flip side, the revenue growth from music subscriptions was offset by the decline in social entertainment services. Revenue for this segment was down by 49.7% to ¥1.76 billion, mainly due to ongoing government regulations on online gambling and the growing competition in the sector.
Additionally, Tencent Music’s gross margin rose to 40.9% from 33.1% in the same period of 2023, mainly driven by robust revenue growth and the expansion of its own content. Meanwhile, the company’s net profit grew 27.5% year-over-year, while net profit attributable to equity holders increased 23.9%.
Is Tencent Music a Good Stock to Buy?
According to TipRanks’ rating consensus, 1698 stock has received a Moderate Buy rating, backed by two Buy recommendations. The Tencent Music share price forecast is HK$54.15, which is 2.75% above the current trading level.
