Quick Note - Tencent Music Entertainment Group (TME US) (Buy) - 1Q26 largely in line; FY26E guidance unchanged

研报英文原文证据摘录

Quick Note - Tencent Music Entertainment Group (TME US) (Buy) - 1Q26 largely in line; FY26E guidance unchanged

Global Markets Research

Tencent Music Entertainment Group TME.N TME US 12 May 2026

EQUITY: INTERNET & NEW MEDIA

Rating1Q26 largely in line; FY26E guidance unchanged Remains Buy

Target price USD 12.50 RemainsQuick Note

Closing price USD 9.24 8 May 20261Q26 results largely in line

Tencent Music Entertainment’s (TME) 1Q revenue rose 7% y-y to CNY7.9bn, largely in

line with both Bloomberg consensus and our estimates. This performance reflected a

combined result of 7% growth of membership revenue and 28% growth of music-related Research Analysts

services (MRS) other than membership, which offset an 11% decline in social China Internet & New Media

entertainment services and others (SE). Gross profit margin (GPM) improved by 0.8pp y-y Rachel Guo - NIHK

to 45%, driven by increase in revenue from membership and ads services, decreased rachel.guo@nomura.com

channel fee, along with the margin improvement in low-margin IP-related services, which +852 2252 1400

was largely in line with Bloomberg consensus/our estimates. Despite a 36% increase in Jialong Shi - NIHK

sales and marketing expenses in 1Q — reflecting higher channel spending and content Jialong.shi@nomura.com

promotion to acquire and retain users on TME's platforms — strict control over general +852 2252 1409

and administrative expenses helped mitigate the impact. As a result, its non-IFRS

operating profit increased 10.5% y-y to CNY2.5bn with margin improving by 0.9pp to 32%,

2% above our estimate. TME’s non-IFRS net profit rose 7% y-y to CNY2.3bn, 1% above

Bloomberg consensus and our estimates.

Soft 2Q26 guidance; keep FY26E full-year guidance unchanged