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Tencent Music Entertainment Group (1698) Fair Value & Analysis

Communication Services · HK · Market cap HK$112B (≈ $14.2B) · ISIN KYG875771134

What is Tencent Music Entertainment Group really worth?

TM Tencent Music Entertainment Group 1698 · HK
PriceHK$32.58
Fair ValueHK$66.77
Upside+104.9%
Quality75/100

A strong business, trading 51% below our fair value of HK$66.77.

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Strengths

✓Highly profitable · 26.5% net margin
✓Low debt · generates free cash flow
✓Ranks above peers (13/15)
✓Wide moat 74/100

Risks

!Weak Growth (revenue 5y +1.9 %/yr)

For context

·5.15% dividend yield
Evidence: High Range HK$46.40 – HK$89.40

Fair value as of: Aug 21, 2026

From 26 valuation models · updated 15 days ago

Fair value updated Aug 21, 2026, revised from HK$66.60 to HK$66.77 (+0.3%) since Aug 13, 2026. Share price −13.4% over the past month.

What runs behind every stock

26 valuation models 8 families, DCF to NCAV 37 quality factors margins, balance sheet, cashflow, debt 6 AI factors moat, what no ratio measures 2,000+ data points verified, per stock, median

69 individual criteria per stock, every one traceable See the method →

What matters now

  • The rarer combination: high quality (75/100) AND below fair value. That earns a closer look rather than a quick verdict.
  • The price is below even our cautious bear case (HK$46.40). The market is more pessimistic than our downside scenario.
  • A fairly wide model range (HK$46.40 to HK$89.40) leaves room in how you read the outcome.

Price vs Fair Value (4 years)

HK$100.30 HK$12.82 Fair Value HK$66.77 Sep 2022 Sep 2026

White line = price, green steps = our fair value per fiscal year, dashed = 300-day average. As of Aug 21, 2026.

How to read this chart

47‑month range HK$12.82 – HK$100.30 · fair‑value band HK$46.40 – HK$89.40 · the HK$32.58 price screens below the HK$66.77 fair value. Green steps = our fair value per fiscal year (point-in-time, no hindsight). Dashed = 300-day average. As of Aug 21, 2026.

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Analysis

Tencent Music Entertainment Group (1698) currently trades at HK$32.58, while our model-based Fair Value estimate is HK$66.77, implying the stock looks roughly 51.2% undervalued today. The Quality Score stands at 75/100 (high quality), in the Communication Services sector. Bull case: the DCF Models group reads highest at a median of HK$67.44 per share, and 21 of the 26 models we run sit above the HK$32.58 price. Bear case: the Dividend Discount group reads lowest at HK$9.99, and 5 of the 26 models stay below the price. Evidence for this calculation is high.

Over the trailing twelve months, Tencent Music Entertainment Group generated revenue of HK$33.4B at a net margin of 26.5%. Revenue grew 7.3% year over year. It earns a return on equity of 12.0%. The balance sheet holds a net cash position of HK$4.7B. Fundamentals as of Aug 21, 2026

Our scenario range runs from HK$46.40 (bear case) to HK$89.40 (bull case); at HK$32.58, the current price sits below that range. Bear and bull are the same models run on conservative and optimistic assumptions (margins, growth, valuation multiples), so a plausible valuation range, not a price target. The share trades about 68% below its 52-week high and 5% above its 52-week low, currently below its 200-day average. For context, the median of 10 Communication Services peers we cover trades at −38% fair-value upside, at 105%, 1698 screens cheaper than that median.

Fair Value models

This estimate rests on fiscal year 2025 figures, and about 8 months have passed since. In that time the company retained roughly HK$1.23 per share, which is 1.8 % of the fair value. The fair value deliberately does not add this in: the models value reported figures, not a projection.

Each model estimates fair value its own way; the Fair Value above is the evidence-weighted, family-balanced blend. Evidence (0–100) measures how completely this model’s inputs are available: well-fed models carry more weight in the blend. The spread across models is intentional, each one stresses a different value driver; dividend models, for instance, come out structurally low when payout is small. Every input is real reported data, nothing guessed.

Model Bear ⓘBear = the cautious scenario: the same model computed with conservative anchors (lower growth, margins and valuation multiples). Together with Bull it frames a plausible valuation range, not a price target.BaseBull ⓘBull = the optimistic scenario: the same model computed with favourable anchors (higher growth, margins and valuation multiples). Together with Bear it frames a plausible valuation range, not a price target. Evidence
Highest evidence
FCF DCF best evidence HK$40.66 HK$68.42 HK$114.44 77
Growth DCF HK$40.73 HK$67.14 HK$110.32 75
Owner Earnings HK$48.31 HK$81.51 HK$136.56 74
All 26 models by family
DCF Models
FCF DCF best evidence HK$40.66 HK$68.42 HK$114.44 77
Owner Earnings HK$48.31 HK$81.51 HK$136.56 74
5Y Revenue Exit HK$28.65 HK$44.70 HK$65.57 71
5Y EBITDA Exit HK$40.08 HK$67.44 HK$100.75 73
5Y P/E Exit HK$49.33 HK$85.83 HK$126.40 69
10Y Revenue Exit HK$31.75 HK$48.02 HK$71.08 65
10Y EBITDA Exit HK$39.93 HK$64.35 HK$99.53 66
10Y P/E Exit HK$45.97 HK$77.56 HK$120.28 62
Earnings-Based
Graham-Dodd HK$23.56 HK$95.79 HK$130.38 61
Lynch FV HK$23.98 HK$34.26 HK$44.54 58
PEG = 1.0 HK$23.98 HK$34.26 HK$44.54 55
EPV HK$36.18 HK$41.94 HK$46.99 72
Dividend Discount
Gordon GGM HK$5.70 HK$11.85 HK$18.80 64
DDM Multi-Stage HK$5.70 HK$9.99 HK$12.44 64
Multiples
P/E Multiple HK$57.16 HK$76.21 HK$95.27 61
P/S Multiple HK$27.06 HK$36.08 HK$45.10 56
P/B Multiple HK$44.17 HK$58.89 HK$73.62 53
EV/EBIT HK$52.40 HK$69.34 HK$86.27 65
EV/EBITDA HK$43.58 HK$57.57 HK$71.57 66
EV/Revenue HK$23.26 HK$32.53 HK$41.81 52
Asset-Based
NCAV (Graham) HK$12.92 HK$17.31 HK$25.84 52
Growth DCF
Growth DCF HK$40.73 HK$67.14 HK$110.32 75
Rev-Margin DCF HK$28.65 HK$44.72 HK$64.73 71
Economic Profit
Residual Income HK$24.80 HK$31.33 HK$80.53 67
ROIC Compounder HK$39.53 HK$52.31 HK$69.32 71
Growth Earnings
Growth-Adj P/E HK$42.83 HK$61.18 HK$79.54 66

Widest divergence: DCF Models (HK$67.44) versus Dividend Discount (HK$9.99). Highest evidence: FCF DCF (77).

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Key figures & financial health

P/E ratio 10.4 as of Jul 2, 2026
P/S ratio 3.51 P/E × margin
EPS (TTM) HK$3.50 price ÷ EPS = P/E 10.4
Dividend yield 5.2% payout 48.0%
Net margin 33.6% FY2025
Return on equity 12.0% TTM
More key figures
Profitability
Return on assets (EBIT) 8.6% avg 5y
Operating margin 30.4% TTM
Growth
Revenue (TTM) HK$33.4B TTM
Revenue growth (YoY) +7.3% 3y avg +4.2%
EPS growth (YoY) −51.8%
Balance sheet & cash flow
Free cash flow HK$9.9B FY2025
Net cash HK$4.7B FY2025

Figures from reported company fundamentals · as of Aug 21, 2026. TTM = trailing twelve months.

Quality Score breakdown

Overall quality 75/100

Of which business quality 73 · Market factors (momentum, volatility) 22

Profitability 53
Margins and returns on capital today
Quality Growth 78
Are margins and returns improving?
Cashflow 82
Earnings quality: real cash, not paper profit
Fin. Strength 85
Balance sheet, leverage, solvency risk
Investment 44
Disciplined investing over empire-building
Low Volatility 53
Calm price path (market factor)
Momentum 13
Price trend over the last 3–12 months (market factor)
52W Momentum 1
Distance to the 52-week high (market factor)
Net Issuance 92
Buybacks instead of dilution

Non-valuation factor families (profitability, growth, cashflow, financial strength, momentum …), each academically grounded. Valuation itself sits in the Fair Value and is deliberately excluded here to avoid double-counting.

All values are scores from 0 to 100 (100 = best against fixed, research-based bands), not percentages. The three market factors (momentum, 52-week proximity, low volatility) are displayed but carry zero weight in the headline number: market sentiment is not a business property.

About the company

Tencent Music Entertainment Group operates online music entertainment platforms that provides music streaming, online karaoke, and live streaming services in the People's Republic of China.

Full company description

Tencent Music Entertainment Group operates online music entertainment platforms that provides music streaming, online karaoke, and live streaming services in the People's Republic of China. It provides QQ Music, Kugou Music, and Kuwo Music that enable users to discover, enjoy, and share music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with audience base; and Lazy Audio, an audio platform. In addition, it sells artist-related merchandise, such as branded apparel, posters and art prints, and accessories; other music services, such as content licensing, sales of digital albums, sales of customized artist-related merchandises, live performances and concerts, and artist management services; and music subscriptions, as well as offers advertising services across its social entertainment platforms. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group operates as a subsidiary of Tencent Holdings Limited.

Company description, as reported by the company or data provider.

Revenue & earnings trend

FY2021 – FY2025 · reported fiscal years

Tencent Music Entertainment Group reported revenue of 32.1B CNY in FY2025 versus 31.2B CNY in FY2021, a compound +0.6%/yr. Reported net income was 10.8B CNY in FY2025, compounding +37.3%/yr from FY2021.

Growth Quality 40/100
Revenue growth is weak, negative or inconsistent.
Latest Revenue (FY 2025)
HK$32.1B
Latest YoY
+12.8%
Avg. revenue growth/yr (3Y) ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump.
+4.2%
Avg. revenue growth/yr (5Y) ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump.
+1.9%
Avg. revenue growth/yr (9Y) ⓘMeasures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump.
+24.8%
Value creation/yr (5Y) ⓘEarnings growth per share (CAGR 5 years) plus dividend yield: value created per share and year.
+29.1% (23.9 + 5.2)
Revenue +0.6%/yr
FY21 31.2B CNY
FY22 28.3B CNY
FY23 27.8B CNY
FY24 28.4B CNY
FY25 32.1B CNY
Net income +37.3%/yr
FY21 3.0B CNY
FY22 3.7B CNY
FY23 4.9B CNY
FY24 6.6B CNY
FY25 10.8B CNY

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Cite: Fair Value Calculator (2026). "Tencent Music Entertainment Group Fair Value". https://www.fairvalue-calculator.com/stock/1698

Earlier news

External third-party headlines (Yahoo Finance, Reuters and others), not an editorial selection.

Peer Group

Internet Content & Information · 153 stocks

How this stock ranks against its industry: the green marker is this stock, the band is the typical 25–75% peer range, and the tick is the median.

Quality Score 75 · Top 25%
Fair Value upside +105% · Top 25%
Return on equity (TTM) 12% · Above median
Return on assets 6% · Above median
Net margin (TTM) 26% · Top 25%
Operating margin (TTM) 30% · Top 25%
Revenue growth 7% · Above median
Dividend yield (TTM) 5.2% · Top 25%
Debt / equity 0.04× · Higher than median

Valuation Multiples vs Internet Content & Information median · lower = cheaper

P/E (TTM) 10.4× · Cheaper than 75% of peers
P/B 1.39× · Cheaper than median
P/S (TTM) 3.34× · Pricier than median
P/FCF 1.4× · Cheaper than median
EV/EBITDA 9.6× · Cheaper than median
PEG 1.11× · Cheaper than median

Strength profile in five axes (Snowflake)

Five quick dimensions, each 0 to 100: VALUE (fair-value potential), FUTURE (revenue growth), PAST (return on equity), HEALTH (low debt), DIVIDEND (yield). Green = this stock, grey = typical sector peer.

VALUEFUTUREPASTHEALTHDIVIDEND
This stock
VALUEFUTUREPASTHEALTHDIVIDEND
Sector peers
VALUE100 · sector 0
FUTURE37 · sector 31
PAST48 · sector 9
HEALTH98 · sector 98
DIVIDEND100 · sector 36

Values & ESG

Does this company touch areas you may want to avoid? The classification is inferred from sector and industry.

None of the checked exposures detected

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10 more Internet Content & Information stocks, each showing price versus our Fair Value estimate (as of Aug 21, 2026).

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Kuaishou Technology, an investment holding company, 81024 HK$34.50 HK$63.28 +83%
NAVER Corporation 035420 213,500 KRW 231,585 KRW +8%
REA Group REA A$177.42 A$88.53 −50%
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Frequently asked questions

Is Tencent Music Entertainment Group (1698) overvalued or undervalued?
As of Aug 21, 2026, our model estimates a fair value of HK$66.77 versus a price of HK$32.58, about +105% upside (undervalued).
What is the fair value of 1698?
Our model-based fair value for Tencent Music Entertainment Group is HK$66.77 (as of Aug 21, 2026), built from audited fundamentals. The current price: HK$32.58.
What is the quality score of 1698?
Tencent Music Entertainment Group has a Quality Score of 75/100. It measures business quality (profitability, growth, cash flow, balance-sheet strength, investment discipline, share issuance). Market factors such as price momentum and volatility do not enter the number; they are shown separately in the detail view.
What is the revenue of Tencent Music Entertainment Group (1698)?
Tencent Music Entertainment Group reported trailing-twelve-month revenue of about HK$33.4B (latest available figure, as of Aug 21, 2026).
What is the net profit margin of 1698?
The net profit margin of Tencent Music Entertainment Group is about 26.5%, meaning it keeps roughly 26.5% of revenue as net income. Based on the latest reported figures.
Does Tencent Music Entertainment Group pay a dividend?
Tencent Music Entertainment Group currently shows a dividend yield of about 5.15% relative to its recent price (as of Aug 21, 2026).
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