HK Stock Market Move | CLOUD MUSIC (09899) has risen by over 3% recently and has been included in the Hong Kong Stock Connect. Institutions point out that the company's overall profit improvement exceeds expectations.

CLOUD MUSIC (09899) rose by over 3%. As of the time of writing, it has increased by 3.52% to HK$95.55, with a transaction volume of HK$7329.31 million. Shenwan Hongyuan Group released a research report stating that recently, CLOUD MUSIC was included in the Hong Kong Stock Connect list. The firm believes that as online music consumption is considered a small luxury, its countercyclical ability has been validated, and it has good market prospects. The dominance of Tencent Music and CLOUD MUSIC in the online music market is clear and stable. Since Tencent Music did not enter the Hong Kong Stock Connect, CLOUD MUSIC is seen as a rare choice in the music track for domestic institutions. Considering the contraction in the company's social entertainment business but an overall improvement in profitability beyond expectations, the firm adjusted its profit forecast. It predicts that the revenue for 2024-2026 would be HK$8.1/8.8/9.5 billion (previously forecasted to be HK$8.1/9.0/9.9 billion), and the Non-IFRS net profit attributable to the parent company for 2024-2026 would be HK$1.5/1.78/2.03 billion (previously forecasted to be HK$0.94/1.14/1.36 billion), corresponding to a PE ratio of 12/10/9x for 2024-2026. CMSC pointed out that CLOUD MUSIC management has indicated that due to its current small market share, the company will focus on expanding the online music user base in the future, rather than prioritizing increasing the average revenue per paying user (ARPPU). The online music business performed well in the first half of the year, with profit margins improving and gradually approaching the levels of industry peer TME-SW, and it is expected that long-term profit margins will continue to grow steadily.