TME Valuation

Tencent Music Entertainment Group

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26.230

+0.51(1.983%)1D

Overview
Forecast
Valuation
Earnings

TME Relative Valuation

TME's fair value is calculated using relative valuation, based on historical P/E and P/S ranges and their premiums/discounts relative to a competitor average, adjusted by weights. If the market price exceeds this fair value range, TME is overvalued; if below, it's undervalued.

Historical Valuation

Tencent Music Entertainment Group (TME) is now in the Fair zone, suggesting that its current forward PE ratio of 27.66 is considered Fairly compared with the five-year average of 21.29. The fair price of Tencent Music Entertainment Group (TME) is between 12.73 to 32.72 according to relative valuation methord.

Relative Value

Fair Zone

12.73-32.72

Current Price：26.23

Fair

27.66

Trailing

Forward

22.11

EV/EBITDA

Tencent Music Entertainment Group. (TME) has a current EV/EBITDA of 22.11. The 5-year average EV/EBITDA is 16.85. The thresholds are as follows: Strongly Undervalued below -8.42, Undervalued between -8.42 and 4.22, Fairly Valued between 29.48 and 4.22, Overvalued between 29.48 and 42.12, and Strongly Overvalued above 42.12. The current Forward EV/EBITDA of 22.11 falls within the Historic Trend Line -Fairly Valued range.

24.81

EV/EBIT

Tencent Music Entertainment Group. (TME) has a current EV/EBIT of 24.81. The 5-year average EV/EBIT is 19.30. The thresholds are as follows: Strongly Undervalued below -8.89, Undervalued between -8.89 and 5.21, Fairly Valued between 33.39 and 5.21, Overvalued between 33.39 and 47.48, and Strongly Overvalued above 47.48. The current Forward EV/EBIT of 24.81 falls within the Historic Trend Line -Fairly Valued range.

8.47

Tencent Music Entertainment Group. (TME) has a current PS of 8.47. The 5-year average PS is 4.03. The thresholds are as follows: Strongly Undervalued below 0.38, Undervalued between 0.38 and 2.20, Fairly Valued between 5.85 and 2.20, Overvalued between 5.85 and 7.67, and Strongly Overvalued above 7.67. The current Forward PS of 8.47 falls within the Strongly Overvalued range.

23.68

P/OCF

Tencent Music Entertainment Group. (TME) has a current P/OCF of 23.68. The 5-year average P/OCF is 19.66. The thresholds are as follows: Strongly Undervalued below -5.39, Undervalued between -5.39 and 7.14, Fairly Valued between 32.19 and 7.14, Overvalued between 32.19 and 44.72, and Strongly Overvalued above 44.72. The current Forward P/OCF of 23.68 falls within the Historic Trend Line -Fairly Valued range.

26.21

P/FCF

Tencent Music Entertainment Group. (TME) has a current P/FCF of 26.21. The 5-year average P/FCF is 22.43. The thresholds are as follows: Strongly Undervalued below -3.60, Undervalued between -3.60 and 9.42, Fairly Valued between 35.44 and 9.42, Overvalued between 35.44 and 48.46, and Strongly Overvalued above 48.46. The current Forward P/FCF of 26.21 falls within the Historic Trend Line -Fairly Valued range.

Tencent Music Entertainment Group (TME) has a current Price-to-Book (P/B) ratio of 1.69. Compared to its 3-year average P/B ratio of 1.89 , the current P/B ratio is approximately -10.69% higher. Relative to its 5-year average P/B ratio of 2.14, the current P/B ratio is about -21.04% higher. Tencent Music Entertainment Group (TME) has a Forward Free Cash Flow (FCF) yield of approximately 0.00%. Compared to its 3-year average FCF yield of 7.47%, the current FCF yield is approximately -100.00% lower. Relative to its 5-year average FCF yield of 6.97% , the current FCF yield is about -100.00% lower.

1.69

P/B

Median3y

1.89

Median5y

2.14

2.91

FCF Yield

Median3y

7.47

Median5y

6.97

Competitors Valuation Multiple

The average P/S ratio for TME's competitors is 5.54, providing a benchmark for relative valuation. Tencent Music Entertainment Group Corp (TME) exhibits a P/S ratio of , which is -100.00% above the industry average. Given its robust revenue growth of 17.91%, this premium appears unsustainable.

P/S

P/E

EV/EBITDA

EV/EBIT

P/S

Revenue Growth

Market Cap

TME.N

Tencent Music Entertainment Group

Spotify Technology SA

Performance Decomposition

Market capitalization of TME increased by 151.25% over the past 1 year. The primary factor behind the change was an increase in P/E Change from 6.51 to 14.11.

The secondary factor is the Revenue Growth, contributed 17.91%to the performance.

Overall, the performance of TME in the past 1 year is driven by P/E Change. Which is more unsustainable.

17.91%

7.16B → 8.44B

Revenue Growth

16.60%

25.06 → 29.22

Margin Expansion

116.74%

6.51 → 14.11

P/E Change

151.25%