Ecosystem defence in focus

Research evidence excerpt

Ecosystem defence in focus

Macquarie Equity Research Tencent Music Entertainment

Key Risks to Investment Thesis Company Description

• More-/less-than-expected competition, which could result TME is one of the largest online music and audio

in slower/faster ARPPU growth and higher/lower marketing entertainment platforms in China, operating four of the top

spend. music mobile apps, QQ Music, Kugou Music, Kuwo Music

• Further tightening/loosening of content regulations and WeSing. TME's platform comprises online music, online

(including Korean entertainment content), which could audio, online karaoke, online concert, and music-centric live

hinder/boost revenue growth. streaming products. The platform also allows different music

communities to communicate, interact and discover more

music.

Figure 1 - TME: Revenue breakdown Figure 2 - TME: Online music ARPPU and paying

ratio trend

Rmb bn

8.4 8.5 8.6 8.7 8.8 9.0 Rmb

7.9 14 30% 7.4 7.4 8 7.0 7.3 6.6 6.9 6.6 6.9 6.8 7.2 7.0 7.5 7.4

12 25%

20%

4 8

15%

2 6

10%

1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26E 2Q26E 3Q26E 4Q26E 20 5%0% Social entertainment services and others

Online music sublicensing, ads, digital albums 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26E 2Q26E 3Q26E 4Q26E Membership services

Online music monthly ARPPU

Online music user paying ratio % (RHS)

Source: Company data, Macquarie Research, May 2026

Tencent Music Entertainment (TME US) CNY/(m) unless otherwise noted

Income Statement Dec FY 2025A 2026E 2027E 2028E Q1/26A Q2/26E Balance Sheet 2025A 2026E 2027E 2028E

Revenue 32,902 34,473 38,108 41,019 7,895 8,727 Cash 8,470 23,570 34,005 51,216

EBITDA 10,272 10,397 11,177 12,335 2,599 2,599 Receivables 3,903 3,862 4,722 4,517