On August 1 and August 2, the stock price of Tencent Music-SW (HK: 01698, hereinafter referred to as "Tencent Music") on the Hong Kong Stock Exchange fell for two consecutive days, with a drop of 2.21% and 3.02% respectively. Based on the closing price on August 2, 2023, the Hong Kong stock market value of Tencent Music is approximately HK$45.417 billion, and the total market value is approximately HK$88.206 billion.
It is worth mentioning that Tencent Music was downgraded by a major bank not long ago. According to multiple media reports on July 31, Citigroup lowered the target price of Tencent Music from US$9.7 to US$7.5. On July 31 and August 1, the stock price of Tencent Music in the US stock market fell by 1.96% and 4.29% respectively, and continued to decline on August 2.
According to Beido Finance, Citigroup has adjusted the target price of Tencent Music several times since 2023. Among them, it lowered the target price of Tencent Music to US$8.2 in the middle and late March of 2023, maintaining a "neutral" rating. In mid-May 2023, Citigroup raised Tencent Music's ADR rating from "neutral" to "buy" and adjusted the target price to $9.70.
In particular, Tencent Music was listed on the New York Stock Exchange on December 12, 2018, with an issue price of US$13/ADS and a total market value of approximately US$21.3 billion. As of the close on August 2, 2023, the stock price of Tencent Music in the US stock market closed at US$6.37 per share, a relative decline of 51.00%, which has been "cut in half".
Correspondingly, the market value of Tencent Music in the U.S. stock market is approximately US$10.9 billion, a decrease of approximately US$10.4 billion (approximately RMB 74.8 billion) compared to the IPO. However, the share price of Tencent Music in the Hong Kong stock market increased from HK$18/share on the first day of listing to HK$25.70/share at the close on August 2, 2023, a relative increase of 42.78%.
During the two listings, the management of Tencent Music has been adjusted, involving positions including chairman, chief executive officer (CEO), co-president, etc. Not long ago, Ye Zhuodong, chief strategy officer (CSO) of Tencent Music, also announced his resignation.
1. A number of major banks have been upgraded, and stock prices in Hong Kong and the United States fluctuate
Recently, a number of major banks have adjusted their ratings on Tencent Music.
Among them, Citigroup lowered the target price of Tencent Music from US$9.7 to US$7.5. Not long ago, Bank of Communications International released a research report stating that Tencent Music’s revenue in the second quarter of 2023 is expected to be 7.25 billion yuan (RMB, the same below), a year-on-year increase of 5%, which is lower than market expectations. At the same time, Tencent Music's 2024 profit forecast was slightly lowered, and its target price was lowered to HK$35.
On July 26, JP Morgan ("JPMorgan Chase") also downgraded Tencent Music's rating from overweight to neutral. In addition, in late July, Daiwa lowered Tencent Music’s revenue forecast from 2023 to 2024 by 4% to 6%, and its profit forecast by 7% to 8%. The target price was lowered from 46 Hong Kong dollars to 38 Hong Kong dollars, reiterating the “buy” rating.
As of the close on August 2, 2023, the stock price of Tencent Music closed at 25.70 Hong Kong dollars per share on the Hong Kong Stock Exchange, which is still about 12 Hong Kong dollars away from the target price given by Daiwa. According to Wind data, since the beginning of 2023, the stock price of Tencent Music on the Hong Kong Stock Exchange has fallen by 21.17%.
In contrast, the highest share price of Tencent Music in the US stock market in the past 52 weeks (one year) was US$9.29 per share. As of the close of US stocks on August 2, 2023, Tencent Music closed at US$6.37 per share, a relative decrease of 31.43%, and an increase of 102.87% compared to the lowest value of US$3.14 per share within a year.
In terms of performance, Tencent Music's revenue and net profit will both grow in the first quarter of 2023. Among them, revenue increased by 5.4% from 6.64 billion yuan in the same period of 2022 to 7.00 billion yuan in the first quarter of 2023; net profit attributable to the parent was 1.148 billion yuan, a year-on-year increase of 88.5%; non-IFRS net profit was 1.463 billion yuan, A year-on-year increase of 57.0%.
Prior to this, Tencent Music had experienced four consecutive quarters of revenue decline. Specifically, the revenue of Tencent Music in the first quarter, second quarter, third quarter and fourth quarter of 2022 will be 6.64 billion yuan, 6.91 billion yuan, 7.37 billion yuan and 7.43 billion yuan respectively, a year-on-year decrease of 15.1% and 13.8 billion yuan respectively. %, 5.6% and 2.4%.
In 2022, Tencent Music's revenue will be 28.34 billion yuan (4.11 billion US dollars), a decrease of 9.3% from 31.24 billion yuan in 2021; the net profit attributable to the parent company will be 3.68 billion yuan, a year-on-year increase of 21.4%; The profit was 4.75 billion yuan, a year-on-year increase of 14.4%.
According to public information, Tencent Music was listed on the New York Stock Exchange on December 12, 2018, with an issue price of US$13.00/ADS. The total funds raised were US$1.066 billion, and the total market value was approximately US$21.3 billion. At that time, Tang Daosheng was the senior executive vice president of Tencent Group and the chairman of Tencent Music, and Peng Jiaxin was the chief executive officer (CEO) of Tencent Music.
According to Bedo Finance, Tencent Music will announce its results for the three and six months ended June 3, 2023 on August 14, 2023.
2. The management "replaced blood", Peng Jiaxin and Liang Zhu have worked together for two years
In the past few years, the management of Tencent Music has also gradually "changed blood". In July 2016, CMC (the former holding company of Kugou Music and Kuwo Music) and the original Tencent Music (including QQ Music and National K Songs) formally merged to form Tencent Music Entertainment Group (referred to as "Tencent Music"). My founder Lei Ming faded out.
In contrast, Xie Guomin, the founder of Ocean Music, and Xie Zhenyu, the founder of Kugou, respectively serve as co-presidents of Tencent Music, Dowson (Tang Daosheng), senior executive vice president of Tencent, concurrently serves as chairman, and Peng Jia, vice president, trusts CEO. In May 2019, Xie Guomin resigned as director and co-president of Tencent Music, effective from June 6, 2019.
After Xie Guomin's resignation, Tencent Music appointed the group's director and co-president Xie Zhenyu as the chief technology officer (CTO), reporting to CEO Peng Jiaxin. At the same time, Chen Linlin, vice president of the group, was appointed as the person in charge of the Kugou business line, and Shi Lili, the vice president of the group, was appointed as the person in charge of the Kuwo business line, both reporting to Peng Jiaxin.
In addition, in March 2019, Wu Weilin no longer served as the vice president of Tencent Music and the head of the copyright management department due to personal reasons. , no longer serves as the person in charge of the business line of iTing.
At the same time, Ye Zhuodong, the chief strategy officer of Tencent Music, replaced Pan Caijun as the head of the group's iTing business line, and other management responsibilities remained unchanged. Before joining Tencent Music, Ye Zhuodong served as the vice president of Baidu, the chief financial officer of the search business group and the general manager of the group's investment and mergers and acquisitions department. He was also a member of the board of directors of Ctrip.com.
On April 15, 2021, there was a "huge earthquake" in the senior management of Tencent Music. Among them, the chairman Tang Daosheng (Dowson Tong) resigned from the chairman of the group, the chairman of the remuneration committee of the board of directors and other positions at the same time. During the same period, Tencent Music appointed Peng Jiaxin as the executive chairman of the group, and appointed Ross Liang as the CEO and member of the board of directors.
Previously, Liang Zhu had served as the vice president of Tencent Group since 2016, and served as the general manager of QQ Music from 2014 to 2016. According to reports, Liang Zhu has rich product and operation experience in multiple business areas of Tencent Group, including QQ, QQ Zone, Tiantian Ptu, QQ Music, Quanmin Karaoke, Youtu Lab, online education, Tencent Documents, etc. .
When he was the CEO of Tencent Music, Liang Zhu said, "I am very much looking forward to working closely with Cussion (Peng Jiaxin), the board of directors and the entire management team to provide our users, musicians and content creators with a solid foundation. Better service, provide the best career development space for our employees, and create more long-term value for our shareholders."
As of the close on April 14, 2021, the share price of Tencent Music in the US stock market closed at US$18.15 per share. As of the close of US stocks on August 2, 2023, the stock price of Tencent Music on the New York Stock Exchange closed at US$6.37 per share, a cumulative drop of 64.90% compared to the previous trading day before Liang Zhu took over as CEO, and a relative decrease of about US$20 billion in total market value ( About RMB 145 billion).
In addition, the number of active users of Tencent Music grew slightly weaker. From 2019 to 2022, the number of users of Tencent Music's online music service will be 653 million, 644 million, 622 million, and 567 million, respectively. Among them, 2020, 2021, and 2022 will all show a downward trend, with a relative decrease of nearly 86 million .
In the first quarter of 2023, the number of users of Tencent Music's online music service increased to 592 million, but it still fell by 6.9% year-on-year. According to data from the China Internet Network Information Center, as early as 2020, the number of users in China's online music entertainment market has exceeded 658 million.
3. Realize the secondary listing, and the revenue in 2022 will drop by about 9% year-on-year
On September 21, 2022, Tencent Music will be listed on the main board of the Hong Kong Stock Exchange ("HKEx") by way of introduction. Meanwhile, Tencent Music's American Depositary Shares ("ADSs") will continue to maintain their primary listing status and continue to trade on the New York Stock Exchange. Among them, each ADS represents two shares, and the shares of the two places are completely interchangeable.
On the first day of listing on the Hong Kong Stock Exchange, the opening price of Tencent Music (HK: 01698) was HK$18.00 per share. On January 5, 2023, the stock price of Tencent Music on the Hong Kong Stock Exchange once rose to 36.65 Hong Kong dollars per share. As of the close on August 2, 2023, Tencent Music closed at HK$25.70 per share on the Hong Kong Stock Exchange, a cumulative increase of 42.78% compared to the first day of listing.
Overall, Tencent Music’s revenue has maintained a growth trend, from 25.443 billion yuan in 2019 to 29.153 billion yuan in 2020, and further increased to 31.244 billion yuan in 2021. In 2022, Tencent Music's revenue will be 28.34 billion yuan, a year-on-year decrease of 9.3%.
According to the 2022 annual report disclosed by Tencent Music, as of April 18, 2023, Tencent held 9.1% of the company's Class A ordinary shares and 98.5% of the Class B ordinary shares, accounting for the total number of ordinary shares. 52.5% of the total voting power, controlling 92.6% of the total voting rights. During the same period, Spotify controlled an 8.2% stake in Tencent Music.
It is worth mentioning that when Tencent Music was listed on the New York Stock Exchange on December 12, 2018, Pacific Alliance Investment Group (TPAG) held 9.8% of the shares, making it the second largest shareholder after Tencent Group. According to Bedo Finance, Taimeng Investment Group has withdrawn from the ranks of shareholders of Tencent Music in 2020 and no longer holds shares.
Currently, Tencent Music owns four major product brands, QQ Music, Kugou Music, Kuwo Music and National K Songs, providing online music and social entertainment services. In addition, Tencent Music also provides the long audio-focused app Lazy Listening Book (acquired in March 2011).
Among them, Peng Jiaxin is the chairman of Tencent Music, Liang Zhu is the CEO and director, Xie Zhenyu is the president, chief technology officer and director, Hu Min is the chief financial officer, Chen Linlin is the vice president of the group and the head of the Kugou business line, Shi Li He is the vice president of the group and the head of the Kuwo business line, and Pan Caijun is the vice president of the group and the head of the content cooperation business.
In addition, on July 17 this year, Ye Zhuodong resigned as chief strategy officer of Tencent Music due to personal reasons.