TME - Tencent Music Entertainment Group equity, debt and subsidiaries

Accuracy score :
97%

 

Summary (from the latest annual and quarterly report)

  • Total equity: 5.8 billion USD
  • Market Cap is 20.8 billion USD ( the last price of the stock is 12.74 USD)
  • Tencent Music Entertainment Group operates online music entertainment platforms that provide music streaming, online karaoke, and live streaming services in the People’s Republic of China.
  • Total stockholders' equity has increased from 5.4 billion USD in 2018 to 5.8 billion in 2019
  • The company has 2.8 billion USD in cash on account
  • Total equity – cash on account = 5.8 billion USD – 2.8 billion USD = 3 billion USD
  • In 2019 the company had only 20 million USD  total debt (In 2018 the company had no debt)
  • The company's revenue has increased in 2018 to 2.76 billion USD from 1.68 billion in 2017
  • Net income in 2018 was 266 million USD, Net income in 2017 was 202 million USD
  • TME does not currently pay a dividend

 

Opinion about the company

Fundamentally it is a good company and in the future we can expect its growth (Total debt is 20 million USD, a big amount of cash on the company's account, ROE is around 5 %).

Tencent Music Entertainment Group operates online music entertainment platforms that provide music streaming, online karaoke, and live streaming services in the People’s Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover and listen to music in personalized ways; and WeSing, which enables users to have fun by singing and interacting with friends, sharing their singing performances with friends, and discovering songs that others have sung. The company also operates Kugou Live and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with those interested in their performance. In addition, it sells music-related merchandise, including Kugou M1 headsets, smart speakers, WeSing karaoke microphones, and Hi-Fi systems; and offers online music event ticketing services, as well as services to smart device and automobile makers to build and operate music services on devices and vehicles. The company was formerly known as China Music Corporation and is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.

Their apps, including QQ Music, Kugou, and Kuwo, have more than 700 million active users and 120 million paying subscribers. It is important to mention that Tencent Music's three services held an estimated 60% market share of music streaming services in China. The number of its online music paying users grew from approximately 19.4 million in the fourth quarter of 2017 to 27.0 million in the fourth quarter of 2018, with a paying ratio of 4.2% in the fourth quarter of 2018. The number of social entertainment paying users grew from approximately 8.3 million in the fourth quarter of 2017 to 10.2 million in the same period in 2018, with a paying ratio of 4.5% in the fourth quarter of 2018.

TME faces competition for users and their time and attention primarily from NetEase Music and other online music providers in China. TME also faces competition from online offerings of other forms of content, including long-and short-form videos, karaoke services, live streaming, radio services, literature, and games provided by other online service providers.

Standalone subsidiaries and acquisitions:

  • Online music services represent 30% of total revenues. TME generates revenues from its online music services primarily from subscriptions, namely from paid music through sale of subscription packages for a fixed monthly fee, this segment is worth 4 billion USD
  • Social entertainment services and others represent 70% of total revenues. TME generates its social entertainment and other services revenues through live streaming, online karaoke, sales of music-related merchandise and certain other services, this segment is worth 10 billion USD
  • The company had several small acquisitions worth no more than 100 million USD

 

Total = 14.1 billion USD

  • In July 2016, Tencent acquired control of CMC through a series of transactions pursuant to which Tencent injected substantially all of its online music business in the PRC (which primarily included QQ Music and WeSing ) into CMC; and in consideration of the foregoing, CMC issued an aggregate of 1,290,862,550 ordinary shares to a wholly-owned subsidiary of Tencent, namely Min River Investment Limited, or Min River. Upon the completion of these transactions, Tencent owned an approximately 61.6% equity interests in CMC and CMC became a consolidated subsidiary of Tencent
  • In December 2016, CMC was renamed “Tencent Music Entertainment Group,” or TME
  • Tencent Music is registered under the ticker NYSE: TME. Their stock opened with $13.00 in its Dec 12, 2018 IPO
  • TME revenues increased by 72.9% from RMB10,981 million in 2017 to RMB18,985 million (US$2,761 million) in 2018

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