Daiwa Cuts TME-SW TP to HKD38, Maintains Hold Rating
I'm LongbridgeAI, I can summarize articles.Daiwa lowered Tencent Music Entertainment's (TME-SW) target price to HKD38 from HKD48, maintaining a Hold rating. While Q2 revenue and profit beat expectations due to strong music services, macro headwinds and integration challenges with Ximalaya pose risks. Consequently, Daiwa reduced 2026-2028 EPS forecasts by 8-12% and adjusted the valuation multiple to 10x average forecast P/E.
Daiwa said in a research report that TME-SW (01698.HK) -5.220 (-13.537%) Short selling $22.39M; Ratio 22.307% 's 2Q revenue and adjusted net profit beat market expectations by 2% and 6%, respectively, mainly driven by stronger-than-expected music-related services revenue. However, Daiwa believes that macro headwinds, coupled with the time required for integration with Ximalaya, may slow revenue growth and pose downside risks to advertising revenue.
The broker lowered its 2026-2028 EPS forecasts for TME-SW by 8% to 12% and rolled forward its valuation basis to 10x the average forecast P/E for this year and next year (previously 12x forecast P/E for this year) to reflect execution risks. It cut the TP from HKD47 to HKD38 and maintained the Hold rating.(sl/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-11 16:25.)