Tencent Music downgraded to Neutral from Buy at Citi

Citi downgraded Tencent Music Entertainment to Neutral from Buy with a price target of $7.50, down from $9.70. The analyst also opened a “30-day negative catalyst watch” on the shares ahead of the Q2 report on August 15. While online music subscription and online advertising revenue are likely to retain “healthy growth momentum,” Citi lowered Q2 social entertainment sales by 7.5%, reflecting tightening measures of live streaming features to prevent illegal gambling activities and strengthened risk controls to ensure healthy online environment starting from early June. The firm expects a bigger impact in the second half of 2023. The “drag from murky social entertainment outlook once again makes the stock less attractive,” writes Citi. It expects the share price to remain range-bound until turnaround signs in social entertainment are seen.