Why Tencent Music Entertainment Group Was Music to Investor Ears This Week

The market very much liked what it heard coming from China's Tencent Music Entertainment Group (NYSE: TME) this week. A better-than-expected earnings report the company published on Tuesday was enough of a hit to rise the stock nearly 12% higher in price over the period, according to data compiled by S&P Global Market Intelligence.

The sweet sounds of a successful quarter

This was the final earnings release for Tencent Music's 2024, and it covered both the fourth quarter and the entirety of the year.

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The company's total revenue amounted to 7.46 billion yuan ($1.03 billion) for the quarter, which was more than 8% higher than the comparable period of 2023. The majority of that came from music subscriptions; these rose a robust 18% to 4.03 billion yuan ($557 million), helped in no small part by a 13% increase in the count of paying users.

On the bottom line, Tencent Music's profit in accordance with IFRS standards grew to nearly 2.08 billion yuan ($287 million) from the year-ago result of 1.41 billion yuan ($195 million). The latest profitability number shook out to 1.26 yuan ($0.17) per each of the company's American depositary shares (ADSes).

In addition to posting healthy growth figures, Tencent Music also topped analyst estimates for the quarter. Collectively, the prognosticators tracking the company were anticipating 7.30 billion yuan ($1 billion) on the top line, and 1.22 yuan ($0.17) per ADS for IFRS net income.

In the earnings release, Tencent quoted its executive chairman Cussion Pang as saying, "Our pioneering initiatives across the music value chain have reshaped the industry landscape and enriched our ecosystem, boosting subscriber penetration rate and lifetime value."

Bopping along to the beat

That's largely C-suite hype, and fancy speak for what's basically a useful service that provides what its audience wants in modern music broadcasting. Tencent Music does what it does quite well, and the rising top and bottom lines are indicative of this. That makes the stock one to watch, although investors should bear in mind the country's economy isn't as hot as it once was.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.