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Tencent Music back to Hong Kong behind: online music "internal volume" intensification, short video will become a new growth rate

via:新浪科技     time:2022/9/23 11:02:07     readed:138

Reporter/Wen Menghua & NBSP;

Editor/Liang Xiao 

Tencent Music Entertainment Group has decided to return to Hong Kong, four years after the bell rang on the New York Stock Exchange.

On September 21, Tencent Music Entertainment Group (hereinafter referred to as Tencent Music) successfully listed on the main board of the Hong Kong Stock Exchange. Tencent Music rose 1.22 per cent to close at HK $18.22 on its first day of trading, giving it a market capitalisation of over HK $60 billion.

"Compared with the New York Stock Exchange listing in 2018, the online music market has lost exclusive rights and the dividend of Internet traffic has gradually disappeared. The valuation logic of music streaming media is no longer a simple comparison between the number of music rights and the number of users. Tencent Music needs to show the capital market a new growth point." CIC Consulting manager Dong Xiaoya told the National Business Daily that in the long run, Tencent Music back to Hong Kong, more investors will pay attention to China's digital music industry, good for the development of the industry.

At present, online music has entered the stock era, NetEase Cloud Music has successfully landed in the capital market, and Douyin has accelerated its entry into the music field. With the increasingly fierce "inwinding" in the music market, can Tencent Music with a slowing growth rate "conquer" the Hong Kong stock market?

周杰伦新专辑 图片来源:QQ音乐APP截图Photo source: QQ Music APP screenshot of Jay Chou's new album

Tencent Music (HK1698, HK $17.2, HK $59 billion market cap) fell 5.6 per cent in Hong Kong as of today's (Sept 22) close; Cloud Music (HK9899, HK $71.65, market cap of HK $15 billion) fell 1.17 per cent.

Exclusive copyright cancellation, Tencent music or short-term pressure

For the secondary listing, Tencent Music chose a "quick fix", in the form of "introduction to the listing", no new shares issued, no underwriting links, shorter approval cycle for the listing, while avoiding unnecessary share dilution.

Although the listing was not intended to raise money, Tencent Music's share price underperformed on its second day in Hong Kong, falling 5.6% while its U.S. share price fell 6.11%.

"This volatility is a normal secondary market reaction." Zhang Yi, CEO of IMedia Consulting, admitted that the recent return to Hong Kong listed Chinese enterprises, the overall stock price volatility is obvious. At the same time, the Hong Kong capital market pays more attention to performance. For Tencent Music, the future growth of revenue and profit will have a great impact on the company's market value and stock price.

In Zhang Yi's view, Tencent music back to Hong Kong listing has expectations, there are also concerns. "This year Tencent hair force video number, online concert derived from the commercial new may be worth looking forward to; At the same time, it has obvious overall advantages in music copyright and users. However, the concern is that Internet stocks, especially online businesses, are not very optimistic in the Hong Kong stock market in general and need more growth profit data, which has certain pressure on Tencent Music."

Tencent Music, China's first music streaming stock, was valued at about $23 billion when it went public in the U.S. in 2018. In the past four years, with Jay Chou and many other exclusive rights, Tencent Music has been sitting on the top of the online music market.

However, in the past year, with the cancellation of exclusive rights and changes in the industry environment, Tencent Music's U.S. stock price fluctuated significantly and its market value fell sharply. Choice data show that since January 2021, Tencent music stock price fell 77.65%; Tencent Music was valued at $7.38 billion as of Sept. 22.

Dong Xiaoya believes that the current return to Hong Kong listing has become the "best choice" for Chinese concept stocks. The return of Tencent Music to Hong Kong stocks is not only conducive to broadening the investor channels of Tencent Music, providing greater liquidity and protection for shareholders of Tencent Music, but also conducive to the revaluation of Tencent Music in the Hong Kong stock market and providing more possibilities for the company.

  "Inside roll" intensifies, video becomes online music new growth rate

Since last year, with the cancellation of exclusive music rights and the popularity of online concerts, the online music market has become increasingly competitive, and the "lying around" of owning exclusive rights has become a thing of the past.

In the post-copyright era, short videos are eyeing up the music industry. Bytedance not only set up the music business, on Douyin online "music player", at the same time a large amount of investment not music, Lehua entertainment; Kuaishou launched the music APP "Komori Sing", launched the double click music plan, added music support, etc., and made frequent movements.

This for the steady first Tencent music, on the one hand, in the face of huge traffic business, and Douyin chasing after each other "arm wrestle"; On the other hand, in the capital market, it will be in Hong Kong with NetEase cloud ushered in a positive contest.

图片来源:每经记者 张建 摄(资料图)Photo credit: Zhang Jian, reporter of Jingjing (file photo)

Tencent Music's latest financial results show that the revenue of Tencent Music in the second quarter of 2022 was 6.91 billion yuan, down 13.8% year on year, mainly due to the pressure of social entertainment and online music non-subscription revenue; In the second quarter, Tencent Music mobile terminal online music MAU (monthly active users) fell 4.8% year on year to 593 million.

From 2018 to 2021, the annual revenue of Tencent music was 18.985 billion yuan, 25.434 billion yuan, 29.153 billion yuan and 31.244 billion yuan respectively, with a slower year-on-year growth rate. Since 2021, Tencent music net profit has been declining year-on-year.

"After the cancellation of the exclusive copyright, Tencent Music's online music business will face more 'inrolling' competition. The music copyright of NetEase Cloud Music has been greatly supplemented, and the number of users has increased rapidly. At the same time, ByteDance's soda music came out of the blue, gaining users through free play and adding to the competitive pressure from short-form video platforms. "In the social entertainment segment, growth has stalled as the number of karaoke users in the country starts to drift away, and the direction of product innovation is unclear." As for the development pressure Tencent music is facing, Dong Xiaoya said.

In the face of industry changes and competition, in 2021, Tencent Music has made the biggest adjustment since its establishment five years ago, upgrading the organizational structure, announcing the establishment of content business line, setting two core directions of content and platform, and aiming at long audio, layout of "content + long audio".

However, Dong Xiaoya pointed out that the current short and long video platforms can not completely replace music platforms. At a time when short and long videos are constantly distracting users, the huge traffic generated by short videos can be a new source of growth for online music. The online music market can seek a cooperative ecology with the short video platform. The communication mode of short video + music may have more impact and the ability to create popularity.

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