Hong Kong stocks presented a mixed picture on Monday, with the Hang Seng Index initially dipping before recovering to close up 0.25%, or 62.87 points. Meanwhile, the Hang Seng Tech Index edged down 0.38%, losing 20.86 points. Among the U.S.-listed Chinese companies trading in Hong Kong, performance was varied. Alibaba slid 1.6%, and Baidu declined 1.34%, while Tencent Music Entertainment (TME) bucked the trend, gaining 1.67%. The positive sentiment surrounding TME was fueled by anticipation of a strong earnings report, briefly pushing its intraday gain above 2%. On Friday, in U.S. trading hours, Tencent Music’s American Depositary Shares (ADS) climbed 2.58%.
After the Hong Kong market close on Monday, Tencent Music Entertainment Group (NYSE: TME; HKEX: 1698) released its unaudited financial results for the second quarter ended June 30, 2025.
The earnings report revealed a robust quarter for TME, highlighting the success of its “content and platform” dual-engine strategy. Key financial metrics displayed impressive growth. Total revenues reached RMB 8.44 billion, a 17.9% year-over-year increase. Adjusted net profit jumped 33.0% to RMB 2.64 billion. Online music services revenue surged 26.4% to RMB 6.85 billion, with subscription revenue growing 17.1% to RMB 4.38 billion. Notably, the number of online music paying users hit 124.4 million, accompanied by an increase in ARPPU (Average Revenue Per Paying User) to RMB 11.7.
Despite a global economic slowdown in 2025, the Chinese market has demonstrated resilience. Benefiting from a positive macroeconomic environment, China’s music industry has continued its steady growth, showcasing innovation and strength. TME has capitalized on this, focusing on enriching its content ecosystem, producing high-quality content like premium live performances and official merchandise to cater to evolving user demands. The company also enhanced its product features and user benefits, creating more immersive and comprehensive music experiences. This strategy has been successful in boosting user engagement, retaining high-value users, and stimulating growth in the music industry. The report also noted a significant milestone: Tencent Music’s Super VIP (SVIP) subscriber base recently surpassed 15 million.
The market reaction to Tencent Music’s solid earnings report has been largely positive, with several brokerage firms issuing optimistic ratings. Morgan Stanley, Goldman Sachs, and CMB International have all given TME either an “Overweight” or “Buy” rating. Morgan Stanley, in its “Overweight” rating, emphasized the increasing contribution of TME’s SVIP business, citing the enhanced user willingness to spend due to premium audio quality, exclusive offline events, and other enhanced benefits, which, in turn, drove ARPPU growth. Jefferies suggested that TME is not only offering a comprehensive music service but also creating more opportunities for growth by enhancing content creation and co-creation capabilities and forming cross-cultural collaborations in fields like film, television, and gaming, thus increasing user stickiness.
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