Lei Di.com Lei Jianping On September 15,
Chinese music entertainment company Tencent Music Entertainment Group (NYSE: TME), has obtained principled approval for the secondary listing on the main board of the Hong Kong Stock Exchange, and has issued relevant listing documents.
Tencent Music’s stock code in Hong Kong is “1698” and is scheduled to start trading on September 21, 2022 (next Wednesday).
Tencent Music adopts an introduction to the listing method this time, and does not involve new stock issuance and fundraising. NIO also adopted this method to list in Hong Kong.
annual revenue is 31.2 billion yuan, and its business layout is leading in the industry
Tencent Music is a pioneer in China's online music entertainment service, providing two major services: online music and social entertainment with music as the core. Tencent Music has a broad user base in China and has four major mobile music products currently known in the domestic market: QQ Music, Kugou Music, Kuwo Music and Kumen K Song.
According to iResearch Consulting Report, according to the number of monthly active users, Tencent Music is the largest online music entertainment platform in China.
In the first quarter of 2022, Tencent Music's monthly active users on the online music mobile side were 604 million, and the monthly active users on the social entertainment mobile side were 162 million. At the same time, as of March 31, 2022, by the number of tracks, Tencent Music also has the largest music content library in China.
According to iResearch Consulting Report, Tencent Music was one of the first companies to launch online music services to Chinese users, and was the first to introduce an online music subscription model; it is also one of the earliest companies to provide online karaoke services in China's online music and audio entertainment industries. Meanwhile, Tencent Music can launch new products earlier than its major competitors in many major product lines and have more advantages in many business and financial indicators. Such advantages also lay a solid foundation for its long-term sustainable growth.
is based on the platform strategy in "one body and two wings". Tencent Music's products continue to innovate based on the four major music entertainment pillars of "listening, watching, singing and playing", deepening users' sense of identity and belonging to the product.
At the same time, Tencent Music is in the field of long audio: by further expanding popular vertical content such as sleep aid, the company continues to enrich differentiated and high-quality long audio content.
financial report shows that Tencent Music's revenue in 2019, 2020 and 2021 was RMB 25.4 billion, RMB 29.2 billion and RMB 31.2 billion, respectively; net profit was RMB 4 billion, RMB 4.2 billion and RMB 3.2 billion, respectively.
Tencent Music's second quarter revenue in 2022 was 6.91 billion (US$1.03 billion), and the company's net profit under non-international financial reporting standards (Non-IFRS) was 1.07 billion yuan, an increase of 13.4% month-on-month.
As of June 30, 2022, Tencent Music held cash, cash equivalents, fixed deposits and short-term investments of 25.8 billion yuan (about 3.85 billion US dollars).
The abundant cash flow also allowed Tencent Music to continue to invest in product and technology research and development, and conducted large-scale stock repurchases.
data shows that Tencent Music's R&D expenditure in 2019, 2020 and 2021 and the three months ended March 31, 2022 increased to 1.159 billion yuan, 1.667 billion yuan, 2.339 billion yuan and 596 million yuan, respectively, accounting for about 4.6%, 5.7%, 7.5% and 9% of the total revenue in the same period.
With a large investment in R&D, Tencent Music has developed a number of innovative technologies, including AI-enabled content prediction model (PDM), listening and music-reading technology, proprietary sound effects, and a wide intellectual property portfolio.
Tencent Music announced a US$1 billion stock repurchase plan in March 2021. It has completed more than 70% by the end of the second quarter of 2022 and will continue to advance.
Li Sanxi, professor at the School of Economics and director of the Digital Economy Research Center of Renmin University of China, believes that overall, the music and entertainment industry still has huge space and growth potential in the future. Based on total revenue in 2021, China is the world's second largest online music service market, and has also jumped to the world's sixth largest music market in industry-related statistics. China has a large user base and their demand for music entertainment is growing.
Li Sanxi said that as China's copyright protection becomes more and more standardized and the services and experiences of various music platforms continue to be innovative and iterated, the willingness of Chinese online music service users to pay is increasing, and the payment rate is gradually increasing, which means that users' demand for high-quality music content and good music experience is continuous, stable and refined, and China's online music service market will also be expected to further embark on the track of high-quality and rapid development.
is conducive to introducing more investors
This time, Tencent Music’s Listing by Way of Introduction is a method of secondary listing. It does not require new shares or sell shares held by existing shareholders during listing, and does not involve the IPO financing process.
compared to the introduction of listing and returning to Hong Kong to list, there is another model that is a dual main listing. The dual main listing refers to the fact that the company has been listed on another stock exchange and is listed in the Hong Kong market in accordance with local market rules. Both capital markets are the main listing places. Even if it is delisted on one exchange, it does not affect the company's listing status on another exchange.
Since 2022, Zhihu, Beike, Tugrao and Miniso have been listed in Hong Kong as dual majors. Bilibili and Alibaba will also complete dual major listings in Hong Kong in 2022. Of course, the preparation time for dual major listing is also longer.
For enterprises, whether to choose to introduce listing or double-main listing must be decided based on their own business conditions.
In recent years, it has become an inevitable trend for Chinese stocks to return to Hong Kong stocks. Many companies including Alibaba, JD.com, Baidu, Weibo, and NIO have chosen to return to Hong Kong for a second listing.
Industry insiders believe that Tencent Music has maintained steady and effective management in terms of capital reserves and cash flow. This time, through introduction of listing and listing on Hong Kong stocks, it can not only provide investors with more trading locations and more flexible trading times, but also dilute the interests of existing shareholders, which is conducive to introducing more investors. Overall, it is more beneficial to its long-term development.
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