TME
Tencent Music
China
★ Quality 25/100Price today
$8.26
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What this business is made of
The business
A karaoke machine that prints cash, but Beijing holds the key.
Tencent Music dominates streaming (music by subscription) in China with QQ Music, Kugou and Kuwo. It makes money two ways: monthly subscriber fees and commissions on virtual gifts in its live singing rooms (WeSing).
It has the largest music catalog in China, exclusive licenses, and is plugged into the Tencent and WeChat ecosystem. But music gets licensed to anyone who pays: the moat is wide, not deep.
Revenue history
From $4.2B to $3.9B in 4 years. Sales are shrinking — the engine is losing steam.
Where each $100 of sales goes
Revenue $4.6B · FY2025
Of every $100 in sales, $65 goes to costs and operations; $35 is left as net profit (35% margin).
Catalysts and risks
Paying subscribers topped 100 million and ARPU (revenue per user) keeps climbing.
GM jumped from ~30% to 42% by shifting from virtual gifts toward subscriptions.
Cash with no debt funds buybacks that shrink the share count.
VIE structure: you don't own real shares, just a contract that Beijing could void.
The social entertainment segment is falling due to live-streaming regulation.
Revenue contracting: the Chinese music market is already mature.
Charlie's note
“At ~9x cash flow, no debt and a 42% margin, you pay little for a business that barely grows. The question isn't the price: it's whether you trust Beijing to honor the contract.”
Analysis · June 2026
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