# Tencent Music Entertainment Group (TME.US)

Canonical: https://gigainvestors.com/s/TME

Analysis as of: 2026-10-16T07:32:25.165Z. Financial observations: FY2016–FY2025.

Listing currency: USD. Reporting currency: CNY.

## Verdict

A wonderful business

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $8.65 per share; close as of 2026-10-15.

## Checklist

### understandable: fail

- 2 revenue declines in the last 10 years (informational)

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 0

- Operating margin variation: 0.47×

Chart: Operating margin; fiscal year observations.

- FY2016: 0.02×

- FY2017: 0.15×

- FY2018: 0.11×

- FY2019: 0.18×

- FY2020: 0.16×

- FY2021: 0.12×

- FY2022: 0.16×

- FY2023: 0.22×

- FY2024: 0.31×

- FY2025: 0.30×

### moat: pass

- ROIC, median of available years: 26.6%

- ROIC, second-lowest year: 20.9%

- Typical minus recent gross margin: -7.9 pp

- Typical gross margin (annual median): 34.4%

- Recent gross margin (lower of latest and 3-year median): 42.3%

- Years with nonpositive capital: 0

- Capital spending / revenue: 1.4%

- ROIC including acquisitions, ten-year median: 11.2%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 4.8%

- FY2017: 26.6%

- FY2018: 52.0%

- FY2020: 29.8%

- FY2021: 20.9%

- FY2022: 28.5%

- FY2023: 27.7%

- FY2024: 26.3%

- FY2025: 21.2%

### economics: pass

- Owner earnings / net income, 5-yr: 0.97×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: CNY 29B

- Net income, five-year total: CNY 29B

- Return on incremental invested capital: 21.9%

- Working capital / revenue, annual change: -1.0 pp

- Working capital / revenue, change between three-year averages: -7.8 pp

- Working capital / revenue, final three-year average: -8.8%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 0.43×

- FY2022: 1.03×

- FY2023: 0.97×

- FY2024: 0.99×

- FY2025: 1.10×

### management: pass

- Historical market-dollar context (not the management verdict): 2018 to 2025 (7 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 26.6% vs 26.3%

- Per-share earnings: 0.50 to 2.12 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 5-year annual growth: -14.3%

- Market cap gain: CNY -97B

- Cumulative retained earnings: CNY 26B

- Diluted shares, 5-year annual growth: -14.3%

- $1 test, starting fiscal year: FY2018

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 22.9%

- Per-share value change: CNY 1.62

- Per-share value, starting three-year median: CNY 0.50

- Per-share value, ending three-year median: CNY 2.12

- Buybacks concentrated in cheaper years (correlation): 0.29

- Average buyback yield: 0.8%

- Buyback history: 7 years

- Debt-funded buybacks: No

- Cumulative net income, 10 years: CNY 41B

- ROIC, first three-year median: 26.6%

- ROIC, last three-year median: 26.3%

Chart: Earnings per share; fiscal year observations.

- FY2016: CNY 0.04

- FY2017: CNY 0.50

- FY2018: CNY 0.58

- FY2019: CNY 1.19

- FY2020: CNY 1.24

- FY2021: CNY 0.90

- FY2022: CNY 1.14

- FY2023: CNY 1.55

- FY2024: CNY 2.12

- FY2025: CNY 7.11

### accounting: pass

- Sloan accruals: 0.9%

- Receivables to sales index (DSRI): 0.96×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 6.6%

- Earnings backed by cash: Yes

- Operating cash / earnings: 0.92×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.29×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -3.4%

- FY2017: -3.9%

- FY2018: -8.5%

- FY2020: -1.1%

- FY2021: -3.3%

- FY2022: -5.7%

- FY2023: -3.2%

- FY2024: -4.0%

- FY2025: 0.9%

## Holders

- [Li Lu](https://gigainvestors.com/HC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Mason Hawkins](https://gigainvestors.com/SE): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Dan Davidowitz](https://gigainvestors.com/pcm): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 65% since Aug 2025 · "Tencent Music Entertainment Group (TME) Slid on Rising Competition and Margin Dilution" (finance.yahoo.com, Feb 2026) · sales +15.8%

Story as of 2026-10-16T09:59:42.201Z; price observation 2026-10-15.

- 2025-05-13: Tencent Music's quarterly revenue jumps amid growth in subscribers ([finance.yahoo.com](https://finance.yahoo.com/news/tencent-music-beats-quarterly-revenue-090646043.html))

- 2025-06-20: Tencent Music Shares Double on Break From China Price Cut Script ([finance.yahoo.com](https://finance.yahoo.com/news/tencent-music-shares-double-break-003025040.html))

- 2025-08-13: Tencent Music HK shares rally 16% to record high on positive Q2 earnings ([investing.com](https://www.investing.com/news/stock-market-news/tencent-music-hk-shares-rally-16-to-record-high-on-positive-q2-earnings-4187064))

- 2026-02-12: Tencent Music Entertainment Group (TME) Slid on Rising Competition and Margin Dilution ([finance.yahoo.com](https://finance.yahoo.com/news/tencent-music-entertainment-group-tme-152810415.html))

- 2026-05-12: Tencent Music (TME) Shares Gain Despite Earnings Miss as Music Services Growth Accelerates ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/tencent-music-tme-shares-gain-125952218.html))

### Sales · FY2024–2025

sales +15.8%; source https://www.sec.gov/Archives/edgar/data/1744676/000119312526160257/tme-20251231.htm; observed 2026-04-17.

- FY2016: CNY 4.4B 

- FY2017: CNY 11B 

- FY2018: CNY 19B 

- FY2019: CNY 25B 

- FY2020: CNY 29B 

- FY2021: CNY 31B 

- FY2022: CNY 28B 

- FY2023: CNY 28B 

- FY2024: CNY 28B 

- FY2025: CNY 33B 

### Gross margin · FY2025

gross margin 44.2%; source https://www.sec.gov/Archives/edgar/data/1744676/000119312526160257/tme-20251231.htm; observed 2026-04-17.

- FY2016: 28.3% 

- FY2017: 34.7% 

- FY2018: 38.3% 

- FY2019: 34.1% 

- FY2020: 31.9% 

- FY2021: 30.1% 

- FY2022: 31.0% 

- FY2023: 35.3% 

- FY2024: 42.3% 

- FY2025: 44.2% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in internet content & information; annual sales are CNY 32.9 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1744676/000119312526160257/tme-20251231.htm (filed 2026-04-17); FY2025: revenue 32902000000; grossProfit 14535000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); TME.US: Tencent Music Entertainment Group operates online music entertainment platforms that provides music streaming, online karaoke, and live streaming services in the People's Republic of China. It provides QQ Music, Kugou Music, and Kuwo Music that enable users to discover, enjoy, and share music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with audience base; and Lazy Audio, an audio platform. In addition, it sells artist-related merchandise, such as branded apparel, posters and art prints, and accessories; other music services, such as content licensing, sales of digital albums, sales of customized artist-related merchandises, live performances and concerts, and artist management services; and music subscriptions, as well as offers advertising services across its social entertainment platforms. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group operates as a subsidiary of Tencent Holdings Limited.

### Why customers stay

Margins ranged from 35.3% to 44.2% during 2023–25; it earns 26.6% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2023: grossProfit / revenue = 35.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2024: grossProfit / revenue = 42.3%.

- Source: https://www.sec.gov/Archives/edgar/data/1744676/000119312526160257/tme-20251231.htm (filed 2026-04-17); FY2025: grossProfit / revenue = 44.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); 10-year return on capital observations [[2016,0.04758255614252484],[2017,0.2662813814152903],[2018,0.5202026806373424],[2020,0.29849017598223787],[2021,0.20855052723321307],[2022,0.2849541271467775],[2023,0.2772408504676141],[2024,0.26267159428499715],[2025,0.21200293015951147]]; median 0.2662813814152903. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Reinvests 8.4% of cash earnings; earns 21.9% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2016: growth capex 0; upkeep 41000000; owner earnings 277000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2017: growth capex 0; upkeep 77000000; owner earnings 1628000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2018: growth capex 0; upkeep 144000000; owner earnings 2058000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2019: growth capex 0; upkeep 286000000; owner earnings 4279000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2020: growth capex 0; upkeep 501000000; owner earnings 4478000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2021: growth capex 28204832.64056444; upkeep 2729795167.3594356; owner earnings 1300204832.6405644. Growth capex / owner earnings = 0.021692607143509623.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2022: growth capex 0; upkeep 1053000000; cash acquisitions 144000000; owner earnings 3784000000. Growth capex plus acquisitions / owner earnings = 0.03805496828752643.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2023: growth capex 0; upkeep 1164000000; cash acquisitions 0; owner earnings 4760000000. Growth capex plus acquisitions / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); FY2024: growth capex 16682342.630743861; upkeep 1015317657.3692561; cash acquisitions 16000000; owner earnings 6606682342.630744. Growth capex plus acquisitions / owner earnings = 0.004946861516234173.

- Source: https://www.sec.gov/Archives/edgar/data/1744676/000119312526160257/tme-20251231.htm (filed 2026-04-17); FY2025: growth capex 0; upkeep 296690340; cash acquisitions 1016000000; owner earnings 12134309660. Growth capex plus acquisitions / owner earnings = 0.0837295263157146.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); Incremental return on capital 0.21904970622997605, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); Dividend observations: [[2016,0],[2017,0],[2018,19000000],[2019,127000000],[2020,0],[2021,106000000],[2022,74000000],[2023,0],[2024,1508000000],[2025,1927027980]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/1744676/000119312526160257/tme-20251231.htm (filed 2026-04-17); FY2025: cash repurchases 652718715 CNY.

### Are managers owners

Insiders own 0% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); TME.US SharesStats.PercentInsiders = 0 percentage points; cache date 2026-10-16.

### What the price says

The price is 2.7 times annual sales.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-17); Closing price 8.65 USD; reporting-to-trading FX 0.14944; FY2025 annual sales per share 21.16698439574182; price multiple 2.7345776436759768. FY2025 cash earnings/share 7.806417337132066. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2018-12: $13.22 per share

- 2019-01: $14.95 per share

- 2019-02: $18.02 per share

- 2019-03: $18.10 per share

- 2019-04: $17.20 per share

- 2019-05: $13.24 per share

- 2019-06: $14.99 per share

- 2019-07: $14.27 per share

- 2019-08: $13.30 per share

- 2019-09: $12.77 per share

- 2019-10: $13.84 per share

- 2019-11: $12.43 per share

- 2019-12: $11.74 per share

- 2020-01: $12.69 per share

- 2020-02: $12.13 per share

- 2020-03: $10.06 per share

- 2020-04: $11.41 per share

- 2020-05: $12.92 per share

- 2020-06: $13.46 per share

- 2020-07: $16.14 per share

- 2020-08: $15.63 per share

- 2020-09: $14.77 per share

- 2020-10: $14.88 per share

- 2020-11: $16.76 per share

- 2020-12: $19.24 per share

- 2021-01: $26.60 per share

- 2021-02: $25.72 per share

- 2021-03: $20.49 per share

- 2021-04: $17.42 per share

- 2021-05: $15.74 per share

- 2021-06: $15.48 per share

- 2021-07: $10.57 per share

- 2021-08: $8.84 per share

- 2021-09: $7.25 per share

- 2021-10: $7.86 per share

- 2021-11: $7.19 per share

- 2021-12: $6.85 per share

- 2022-01: $6.18 per share

- 2022-02: $5.39 per share

- 2022-03: $4.87 per share

- 2022-04: $4.25 per share

- 2022-05: $4.18 per share

- 2022-06: $5.02 per share

- 2022-07: $4.21 per share

- 2022-08: $5.11 per share

- 2022-09: $4.06 per share

- 2022-10: $3.61 per share

- 2022-11: $7.01 per share

- 2022-12: $8.28 per share

- 2023-01: $8.39 per share

- 2023-02: $7.54 per share

- 2023-03: $8.28 per share

- 2023-04: $7.41 per share

- 2023-05: $6.94 per share

- 2023-06: $7.38 per share

- 2023-07: $6.99 per share

- 2023-08: $6.82 per share

- 2023-09: $6.38 per share

- 2023-10: $7.26 per share

- 2023-11: $8.51 per share

- 2023-12: $9.01 per share

- 2024-01: $9.40 per share

- 2024-02: $10.47 per share

- 2024-03: $11.19 per share

- 2024-04: $12.55 per share

- 2024-05: $14.45 per share

- 2024-06: $14.05 per share

- 2024-07: $14.18 per share

- 2024-08: $10.44 per share

- 2024-09: $12.05 per share

- 2024-10: $11.13 per share

- 2024-11: $11.41 per share

- 2024-12: $11.35 per share

- 2025-01: $11.98 per share

- 2025-02: $12.19 per share

- 2025-03: $14.41 per share

- 2025-04: $13.42 per share

- 2025-05: $16.84 per share

- 2025-06: $19.49 per share

- 2025-07: $20.99 per share

- 2025-08: $24.52 per share

- 2025-09: $23.34 per share

- 2025-10: $22.32 per share

- 2025-11: $18.45 per share

- 2025-12: $17.53 per share

- 2026-01: $16.78 per share

- 2026-02: $14.60 per share

- 2026-03: $9.28 per share

- 2026-04: $9.17 per share

- 2026-05: $9.22 per share

- 2026-06: $8.35 per share

- 2026-07: $9.45 per share

- 2026-08: $8.27 per share

- 2026-09: $7.93 per share

- 2026-10: $8.65 per share

## Annual estimated value (USD per share)

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 20-F filing](https://www.sec.gov/Archives/edgar/data/1744676/000119312526160257/tme-20251231.htm); period 2025-12-31, filed 2026-04-17.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.