In "Major Banks," China International Capital Corporation: Tencent Music plans to acquire Himalaya to improve the differentiated layout of its content ecosystem

CICC published a research report stating that after Tencent Music (01698.HK)(TME.US) acquired Ximalaya, Ximalaya responded that if the merger is officially completed, it will maintain its existing brand, operate its current products independently, keep its core management team unchanged, and continue its strategic development direction.

CICC believes that Ximalaya's long audio content complements Tencent Music in terms of users and content. If this acquisition materializes, differentiated content rights will help refine the operation of paying users, which is one of the core drivers for Tencent Music to enhance the penetration rate of Super VIP (SVIP) subscriptions and support sustainable growth in average revenue per paying user (ARPPU).

In addition, CICC maintains its forecast for Tencent Music's non-International Financial Reporting Standards (Non-IFRS) net profit for the next two years, keeping the company's "outperforming the industry" rating, with a target price of HKD 80 for the Hong Kong stock and USD 20.7 for the US stock. The firm believes that the risks faced by Tencent Music include the acquisition not being fully realized, intensified competition, tightening regulations, slowing growth in online music business, and continued pressure on social entertainment revenue