Tencent Music Entertainment Group
Tencent Music Entertainment Group Fundamental Analysis
Tencent Music Entertainment Group (TME) shows moderate financial fundamentals with a PE ratio of 14.63, profit margin of 34.08%, and ROE of 14.05%. The company generates $31.2B in annual revenue with weak year-over-year growth of 2.34%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 70.5/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze TME's fundamental strength across five key dimensions:
Efficiency Score
ExcellentTME demonstrates superior asset utilization.
Valuation Score
ExcellentTME trades at attractive valuation levels.
Growth Score
ModerateTME shows steady but slowing expansion.
Financial Health Score
ExcellentTME maintains a strong and stable balance sheet.
Profitability Score
ModerateTME maintains healthy but balanced margins.
Key Financial Metrics
Is TME Expensive or Cheap?
P/E Ratio
TME trades at 14.63 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, TME's PEG of 0.35 indicates potential undervaluation.
Price to Book
The market values Tencent Music Entertainment Group at 1.91 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 15.45 times EBITDA. This signals the market has high growth expectations.
How Well Does TME Make Money?
Net Profit Margin
For every $100 in sales, Tencent Music Entertainment Group keeps $34.08 as profit after all expenses.
Operating Margin
Core operations generate 40.77 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $14.05 in profit for every $100 of shareholder equity.
ROA
Tencent Music Entertainment Group generates $10.31 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Tencent Music Entertainment Group generates strong operating cash flow of $10.14B, reflecting robust business health.
Free Cash Flow
Tencent Music Entertainment Group generates strong free cash flow of $9.83B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $6.41 in free cash annually.
FCF Yield
TME converts 6.42% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
14.63
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.35
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.91
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.90
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.05
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.08
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.14
vs 25 benchmark
ROA
Return on assets percentage
0.10
vs 25 benchmark
ROCE
Return on capital employed
0.14
vs 25 benchmark
How TME Stacks Against Its Sector Peers
| Metric | TME Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 14.63 | 21.28 | Better (Cheaper) |
| ROE | 14.05% | 1116.00% | Weak |
| Net Margin | 34.08% | -55491.00% (disorted) | Strong |
| Debt/Equity | 0.05 | 1.38 | Strong (Low Leverage) |
| Current Ratio | 2.08 | 1.61 | Strong Liquidity |
| ROA | 10.31% | -204827.00% (disorted) | Strong |
TME outperforms its industry in 5 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Tencent Music Entertainment Group's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
21.47%
Industry Style: Growth, Technology, Streaming
High GrowthEPS CAGR
81.50%
Industry Style: Growth, Technology, Streaming
High GrowthFCF CAGR
80.28%
Industry Style: Growth, Technology, Streaming
High Growth