Market Insight | Tencent Music-SW drops nearly 4% as net member growth guidance is lowered, target price downgraded by multiple major banks after earnings

Tencent Music-SW fell by nearly 4%, as of the time of publication, it dropped by 3.79% to HKD 41.85, with a turnover of HKD 1465.01 million. Daiwa pointed out that the company's second-quarter performance roughly meets market expectations, with the latest guidance indicating a 18% year-on-year growth target for music subscriptions in 2025. Both the guidance for the second half of this year and beyond are lower than the bank's expectations, and the company has also delayed the time to achieve its medium to long-term goals. Tencent Music's rating was downgraded from "buy" to "hold" for two consecutive levels, with the target price reduced from HKD 66 to HKD 46. Goldman Sachs also stated that Tencent Music's second-quarter performance met expectations, but the outlook for the second half of this year to 2025 varies. The management has revised the quarterly net new user guidance from the original 3 million to a range of 1.5 million to 2 million. The shift in Tencent Music's growth momentum may cause some investors to worry about multiple contractions, but the long-term growth prospects are optimistic, with the target price lowered by 11% to HKD 55.1. In addition, CICC has lowered Tencent Music's target price from HKD 63 to HKD 51