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Is It Time to Get Greedy With Tencent Music Entertainment?

May 14, 2019 / Leo Sun

Tencent Music Entertainment (NYSE:TME), the largest streaming music company in China, recently posted its first-quarter earnings. Its headline numbers were impressive -- its revenue rose 39% annually to 5.74 billion RMB ($855 million), beating estimates by about $5 million.Its operating profit rose 23% annually to 1.15 billion RMB ($171 million), as its adjusted net profit grew 15% to 1.2 billion RMB ($179 million), or $0.11 per ADS -- which cleared expectations by a penny. However, Tencent Music's stock tumbled after the report, presumably due to the marketwide sell-off sparked by rising tariffs and trade tensions. Yet Tencent Music's core business isn't exposed to those headwinds, and the stock looks fairly cheap relative to its long-term growth potential. Should investors ignore the noise and buy this stock? Tencent Music's online music unit, which was formed by merging China's biggest streaming platforms, generates its revenue from subscription fees, ads, and di...