研究报告全文：MN18Jan2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateTMETMEUSMakingprogressintoscaleoptimizationTargetPriceUS1050TMEonlinemusicbusinessoperatingefficiencycontinuestoimprovePreviousTPUS684progressivelyamideconomicrecoveryItisontrackforstrongearningsreboundUpDownside168despitenear-termtop-linepressureSocialentertainmentbusinesscontinuestoCurrentPriceUS899facepressureasthesurgeofCOVID-19casesimpactcontentsupplyandcompetitionisstillabundantThroughonlinemusicbusinessmodeloptimizationChinaInternetandleveragingoffparentcousertrafficsynergiesoverallcostscontrolcouldhelpSaiyiHECFAstabilizemarginsWeslightlyadjustedFY2324totalrevenueforecastdownby8523916173921toreflectchallengesfacedbythesocialentertainmentbusinessbutraisedhesaiyicmbicomhkFY2324adjustednetincomeforecastby711inviewofitsbusinessmodeloptimizationandlong-termrecurringincomefromitsonlinemusicservicesWentaoLUluwentaocmbicomhkbusinessWerolledforwardvaluationtoFY23EandtheDCF-valuationderivedTPisraisedby54toUS1050duetoenhancedlong-termprofitprofilewhichYeTAOtranslatesinto22x19xFY2324PEMaintainBUYfranktaocmbicomhkResilient4Q22EearningsreboundFor4Q22EweestimatetotalrevenueStockDatadeclinewilldecelerateto4YoY3Q222Q22-14-6YoYastheonlineMktCapUSmn144422musicrevenuegrowthreacceleratesWeforecastonlinemusicrevenuetoAvg3mthstoUSmn63increaseby23YoYtoRMB36bnin4Q22Edrivenbystronggrowthof52wHighLowUS918312musicsubscriptionandrecoveryofadbusinessSocialentertainmentisTotalIssuedSharesmn16065SourceFactSetexpectedtodropby19YoYtoRMB38bnin4Q22EslightlybelowourpreviousexpectationasthesurgeofCOVID-19casesinDecemberimpactedShareholdingStructurelivestreamingcontentsupplyWeforecastGPMtoimprovefrom288326Tencent532Spotify82in4Q213Q22to329in4Q22EdrivenbycontrolinaudiocontentSourceCompanydatainvestmentandrecoveryhigher-marginnon-subsmusicbusinessWeforecastnon-IFRSnetincomewillgrowby76YoYtoRMB15bnin4Q22ESharePerformancebetterthanourpreviousexpectationmainlyduetoitsstringentbudgetcontrolAbsoluteRelative1-mth148167insalesandmarketing3-mth12821193RevenuerecoveringinFY2324ELookingaheadweforecasttotalrevenue6-mth10251056toreboundby58inFY2324EmainlydrivenbysolidgrowthofonlinemusicSourceFactSetbusinessFY2324E1515YoYMusicsubscriptionwillremainasthekey12-mthPricePerformancegrowthdriverwithbalancedgrowthofsubscriberbaseandARPPUwhileadbusinesswillreboundfromthelowbaseWeforecastsocialentertainmentrevenuewilldropby4inFY23EduetocompetitivepressurebeforestabilizinginFY24ETMEwillseestrongoperatingleverageinFY2324Eafterexpensesoptimizationandtop-linerecoveryWeestimate15non-IFRSnetincomeCAGRoverFY22-24EMaintainBUYWelikeTMEduetoitsresilientearningsgrowthoutlook70SourceFactSetYoYearningsgrowthin4Q22Eand15earningsCAGRoverFY22-24EamidthemacrobackdropTMEremainsastheabsolutemarketleaderintermofcontentandsubscriberbaseTMECloudMusic8538mnmusicsubscribersTMEscurrentvaluationisfairat16xFY24PEconsideringitsstrongearningsgrowthReiterateBUYEarningsSummaryYE31DecFY20AFY21AFY22EFY23EFY24ERevenueRMBmn2915331244282542955631825YoYgrowth14672964677Grossmargin319301309332348NetprofitRMBmn4176032150373763996047893AdjustednetprofitRMBmn4949041460477465415962875EPSAdjustedRMB299250297337391ConsensusEPSRMB299250288314343PSx3331343330Non-IFRSPEx197235204180155SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk18Jan2023BusinessforecastsupdateandvaluationWeslightlyadjustedFY2324totalrevenueforecastdownby21toreflectchallengesfacedbythesocialentertainmentbusinessbutraisedFY2324adjustednetincomeforecastby711inviewofitsprudentcontrolincontentinvestmentandmarketingexpensesFigure1TMEforecastrevisionCurrentPreviousChangeRMBmnFY22EFY23EFY24EFY22EFY23EFY24EFY22EFY23EFY24ERevenue282542955631825283043024332189-02-23-11GrossProfit87429812110718760955010413-022763OperatingProfit4353481657384296439249881397150Non-IFRSnetprofit4775541662884700506256451670114Non-IFRSEPSRMB2933392931351670114GrossMargin30933234831031632300ppt16ppt24pptOperatingMargin15416318015214515502ppt18ppt25pptNon-IFRSnetmargin16918319816616717503ppt16ppt22pptSourceCMBIGMestimatesFigure2CMBIGMestimatesvsconsensusCMBIGMConsensusDiffRMBmnFY22EFY23EFY24EFY22EFY23EFY24EFY22EFY23EFY24ERevenue282542955631825283062953831520-020110GrossProfit87429812110718760946510328-023772OperatingProfit4353481657384072465652086934102Non-IFRSnetprofit4775541662884670508955562264132Non-IFRSEPSRMB2933392931342264132GrossMargin30933234830932032800ppt12ppt20pptOperatingMargin15416318014415816510ppt05ppt15pptNon-IFRSnetmargin16918319816517217604ppt11ppt21pptSourceBloombergCMBIGMestimatesFigure3TMEkeyfinancialdataforecastsRMBmn20212022E2023E2024E4Q22EOnlinemusic114671245514366164623531YoYchange22786153146226Subscriptionrevenue7335869310225120792344YoYchange319185176181202Otherrevenue41323761414143831186YoYchange91-9010158276Socialentertainmentandothers197771579915190153633809YoYchange-01-201-3911-194Totalrevenue312442825429556318257340YoYchange72-964677-35GPM301309332348329AdjustedNPM133169183198200Adjustednetprofit41464775541662881468YoYchange-162152134161764SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE218Jan2023DCFvaluationOurtargetpriceisUS1050basedontheDCFvaluationmethodologyWACCof116andterminalgrowthof25Ourtargetpricetranslatesinto2219xFY2324Enon-IFRSPEFigure4TMEDCFValuationRMBmn2023E2024E2025E2026E2027E2028E2029E2030EFreecashflow47184884689078099888105761237412501NPVoffreecashflow44962Discountedterminalvalue65536Netcash6875TotalTMEvaluation117373NumberofADSdilutedmn1621ValuationperADSUS1050SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE318Jan2023FinancialSummaryINCOMESTATEMENT2019A2020A2021A2022E2023E2024EYE31DecRMBmnRevenue254342915331244282542955631825Costofgoodssold167611985121840195121974420755Grossprofit8673930294048742981211071Operatingexpenses405145925604438949965333Sellingexpense204124752678115811521229Adminexpense270331014009447346404997Others69398410831242797892Operatingprofit462247103800435348165738ShareoflossesprofitsofassociatesJV1819472200Interestexpense649712177115103Pre-taxprofit454046323632429847015634Incometax563456417561705845Aftertaxprofit397741763215373839964789Netprofit397741763215373839964789Adjustednetprofit490849494146477554166288BALANCESHEET2019A2020A2021A2022E2023E2024EYE31DecRMBmnCurrentassets269143168726791270713320535574Cashequivalents1542611128659185381193715456Accountreceivables219828003610203237082298Inventories261824324357Prepayment222028462731214526812392STbankdeposits70001485812769131521354713953Othercurrentassets44371066117312901419Non-currentassets257643658640463409864148942012PPE179176243234232236Right-of-useassets148311283283283283Deferredincometax192303346363381401InvestmentinJVsassos48922553599364936993749Intangibles162220202829269025092326Goodwill171401749219121193711962119871FinancialassetsatFVTPL446197717302744875977749Othernon-currentassets153342586740694771667397Totalassets526786827367254680577469377586Currentliabilities84909602104507543101748262Accountpayables255935654329251041942739Taxpayable386445363328343370Othercurrentliabilities547654895666461055395052Leaseliabilities69103929598101Long-termborrowings51059405749572157305747Bondpayables051755062506250625062Obligationsunderfinanceleases78218205215226237Othernon-currentliabilities432547482444442448Totalliabilities90001554216199132641590514009Sharecapital222222Capitalsurplus344253491032395323953239532395Retainedearnings70071111114194179322192826717Otherreserves215662223726372637263726Totalshareholdersequity435905224550317540555805162840Minorityinterest88486738738738738Totalequityandliabilities526786827367254680577469377586PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE418Jan2023CASHFLOW2019A2020A2021A2022E2023E2024EYE31DecRMBmnOperatingProfitbeforetaxation454046323632429847015634Depreciationamortization5838241001559582606Taxpaid564637589000Changeinworkingcapital982497579983194456Others659563616561705845Netcashfromoperations620048855239331447714939InvestingCapitalexpenditure2865012758411399427Acquisitionofsubsidiariesinvestments455402078250250250Netproceedsfromdisposalofshort-term366877000investmentsOthers780713171286716735754Netcashfrominvesting8102142065999137713831431FinancingNetborrowings054000000Proceedsfromshareissues121340000Others43263710101111Netcashfromfinancing3152923710101111NetchangeincashCashatthebeginningoftheyear1735615426111286591853811937Exchangedifference326967000Cashattheendoftheyear1542611128659185381193715456GROWTH2019A2020A2021A2022E2023E2024EYE31DecRevenue34014672964677Grossprofit192731170122128Operatingprofit126719193146106191Netprofit11715023016369199Adjnetprofit17608162152134161PROFITABILITY2019A2020A2021A2022E2023E2024EYE31DecGrossprofitmargin341319301309332348Operatingmargin182162122154163180Adjnetprofitmargin193170133169183198ReturnonequityROE988763727179GEARINGLIQUIDITYACTIVITIES2019A2020A2021A2022E2023E2024EYE31DecNetdebttoequityx030100010102Currentratiox323326363343Receivableturnoverdays264313374364354344Payableturnoverdays478563660640620610VALUATION2019A2020A2021A2022E2023E2024EYE31DecNon-IFRSPE198197235204180155PB393031181715SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE518Jan2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBISwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE6