CICC: Lower Tencent Music H-share target price to 100 Hong Kong dollars, maintain "outperform" rating.

Zhongjin released a report stating that Tencent Music's third quarter revenue was 84.6 billion yuan, an annual increase of 20.6%; Non-IFRS net profit was 24.1 billion yuan, an annual increase of 32.6%, slightly higher than the bank's expected 23 billion yuan, primarily due to better-than-expected performance in non-subscription music services. Considering the growth of new businesses in 2025 and potential investments in 2026, Zhongjin respectively adjusted its forecast for Tencent Music's Non-IFRS net profit for the next two years by 1.9% and 4.1%, to 9.63 billion and 10.75 billion yuan. The bank maintains its "outperform industry" rating for Tencent Music, taking into account the gross margin trend for 2026, and lowered its target prices for US stocks and Hong Kong stocks by 11.6% and 12.7% to $26 and 100 Hong Kong dollars, respectively, corresponding to a forecasted P/E ratio of 26 times for 2026.