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Chinese billionaire Ma Huateng's tech giant Tencent is set to acquire a nearly 10% stake in K-pop agency SM Entertainment from billionaire Bang Si-hyuk's rival agency Hybe, as thawing relations between China and South Korea have signaled a potential rise in demand for Korean cultural exports.

Upgrade Tencent Music to Buy from Sell, citing strong Q1 results, margin improvement, and robust subscription growth. Music subscription momentum is driven by rising ARPU, paying users, and premium tier adoption, offsetting weakness in social entertainment. Potential M&A, especially with Ximalaya, could enhance content, user stickiness, and ARPU, though likely via dilutive stock transactions.

Tencent Music Entertainment Group (NYSE:TME ) Q1 2025 Results Conference Call May 13, 2025 7:00 AM ET Company Participants Millicent Tu - Head of Investor Relations Kar Shun Pang - Executive Chairman Ross Liang - Chief Executive Officer Min Hu - Chief Financial Officer Conference Call Participants Zhi Yi Chen - Goldman Sachs Alicia Yap - Citi Ellie Jiang - Macquarie Yang Liu - Morgan Stanley Alex Yao - JP Morgan Wei Xiong - UBS Fang Wei - Mizuho Securities Millicent Tu Good evening, good morning, and welcome to Tencent Music Entertainment Group's First Quarter 2025 Earnings Conference Call. I am Millicent Tu, Head of IR.

Tencent Music Entertainment exceeded analysts' expectations for first-quarter revenue on Tuesday, driven by growth in subscribers for its online music services.

The market has been treading through rough waters in 2025, but several stocks in the entertainment industry are among the stars shining the brightest despite this. While many sectors have struggled to gain traction amid economic uncertainty and mixed earnings results, a select group of entertainment names has managed to stand out.

Tencent Music Entertainment Group is in advanced talks to buy China's largest online audio platform Ximalaya Inc for $2.4 billion, Bloomberg News reported on Friday.

In a market where income-focused investors seek dividend reliability, four companies, from Wall Street heavyweights to international players, are stepping up with substantial payout hikes. JPMorgan Chase, Williams-Sonoma, Tencent Music Entertainment, and CareTrust REIT have each announced dividend increases of 10% or more, signaling financial strength and a strong commitment to shareholder returns.

Tencent Music's 4Q24 shows strong growth in online music services but continued weakness in social entertainment, leading to a cautious stock outlook. Music subscription revenue grew 18% y/y, driven by increased paying users and ARPU, while social entertainment revenue declined 13% y/y. TME's valuation should focus on the music subscription segment, implying a 10% downside to $13/share, given the limited value of social entertainment.

The market very much liked what it heard coming from China's Tencent Music Entertainment Group (TME -1.96%) this week. A better-than-expected earnings report the company published on Tuesday was enough of a hit to rise the stock nearly 12% higher in price over the period, according to data compiled by S&P Global Market Intelligence.

Tencent Music Entertainment Group shares surged following fourth-quarter earnings that exceeded expectations that reinforced its strategic focus on high-quality growth and artificial intelligence (AI) to enhance user engagement. Tencent Music's total revenue rose 8.2% year-over-year to RMB7.46 billion, exceeding consensus estimates by 2.2%.