Tencent Music (TME US) Hold: Growth opportunities and competition challenges

研报英文原文证据摘录

Tencent Music (TME US) Hold: Growth opportunities and competition challenges

for these

efforts to be realized in the form of improved membership numbers and ad revenue may 52-WEEK PRICE (USD)

take time. Taking into consideration upside from Ximalaya, we keep our estimates largely 29.00

unchanged. Should the closing of the deal proceed at a faster pace, there could be

17.90

upside. Taking into account the impact on cash and share count post Ximalaya deal

payment, we cut our TP to USD10.60 (from USD13.50). We maintain a Hold rating. 6.80

05/25 11/25 05/26

Ximalaya deal: Post M&A, TME is required to remove exclusive online audio content and Target price: 10.60 High: 26.36 Low: 8.99 Current: 9.19

it is also barred from raising subscription prices and paywall to ensure fair competition. On Source: LSEG IBES, HSBC estimates

the user front, QM data shows Ximalaya’s mobile MAU y-o-y growth turned positive from

July 2025 and rose by 28% y-o-y in 1Q26 (exhibit 4). We expect Ximalaya to lift Charlene Liu*

Head of Internet and Gaming Research, Asia Pacific

subscription and ad revenue for TME, and it can also deepen SVIP/paid content offerings The Hongkong and Shanghai Banking Corporation

Limited, Singapore Branch

leveraging Ximalaya’s long-form content library which in turn improves its membership charlene.r.liu@hsbc.com.sg

and ads outlook. While GPM is accretive in nature, we see a high opex ratio diluting near- +65 6658 0615

term OPM. Cost optimization and synergies between platforms can reverse the impact Christina Chen*, CFA

Analyst, Internet Research

over time. TME can also resume share repurchases when the deal officially closes. The Hongkong and Shanghai Banking Corporation Limited

christina.z.chen@hsbc.com.hk

1Q26 results: Non-GAAP earnings were 2% above HSBCe/consensus.