D B Cuts TME-SW TP to HKD57; 2Q Results In Line
I'm LongbridgeAI, I can summarize articles.DB cut Tencent Music Entertainment's target price to HKD57 from HKD66, citing margin deterioration due to a shift toward lower-margin IP services. Despite in-line 2Q results with revenue up 6% YoY, gross margins declined. DB raised FY2026/2027 revenue forecasts by 2% but lowered profit and free cash flow estimates, maintaining a 'Buy' rating.
D B published a report stating that TME-SW (01698.HK) -0.120 (-0.349%) Short selling $8.36M; Ratio 9.759% 's 2Q results were broadly in line with expectations, with revenue rising 6% YoY and adjusted net profit increasing 4% YoY. Music-related revenue grew 11% YoY, showing signs of gradual stabilization driven by the consolidation of Ximalaya, growth in Super VIP memberships, and solid momentum in IP-related services. However, gross margin declined both QoQ and YoY, mainly due to the revenue mix shifting toward lower-margin IP-related businesses.
The broker raised its revenue forecasts for FY2026/FY2027 by 2%/2%, but lowered adjusted net profit forecasts by 2%/3%. Meanwhile, due to margin deterioration, it also reduced its long-term free cash flow forecasts, leading to a cut in the TP from HKD66 to HKD57. The broker reiterated its "Buy" rating and remained positive on the company's leading position in online music and audio streaming.(ha/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-17 16:25.)