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China’s Tencent Music Entertainment Spooks Investors With Q2 Report

New York-listed Tencent Music Entertainment (TME) share prices have dropped following the Monday release of the company’s unaudited second-quarter financial report — despite a 31% year-on-year growth in revenue.

China’s TME is owned by the broader, Hong Kong-listed Chinese conglomerate Tencent Holdings. The music company is currently in negotiations with French media giant Vivendi for a 10% stake in Universal Media Group, for a potential $3.36 billion.

According to the unaudited Q2 report, TME’s total revenue grew to RMB5.9 billion ($835 million), but it still missed estimates of RMB5.95 billion ($842 million), Reuters cited IBES data from Refinitiv as saying. Net profits only rose 2.5% to RMB9.27 million ($1.3 million).

One cause for investor concern is that the monthly average revenue per user of its social entertainment services — a closely tracked measure of growth — saw its slowest increase since the firm went public last December, rising just 16.5% to RMB130.2 ($18.45), according to Reuters.

Following release of the financial report, TME’s share price dropped by as much as 8% before recovering some ground.

TME runs four out of five of China’s top digital music apps, with more than 90% market penetration, but generates much of its revenue from social entertainment services like Karaoke platform “WeSing” or concert live-streaming platform “Kugou Live.” Such services and platforms brought in RMB4.34 billion ($614 million), the firm said

Article source: https://variety.com/2019/music/news/tencent-music-entertainment-vivendi-universal-media-group-1203300603/

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