China’s Tencent Music Entertainment Group announced a strategic partnership with Thailand’s largest international record and publishing company, GMM Grammy to tap the potential of the music markets in China and Thailand.
Tencent Music (TME) said that the partnership will focus on music content creation and represents a joint exploration of the Asian digital music entertainment market by both sides. At the same time, the partnership will enable Chinese music products going overseas, and will have a positive impact on promoting exchanges and cooperation across the global music industry.
China’s online music entertainment platform, said that the collaboration will make use of WeSing, TME’s international online Karaoke social community, and allow co-creation of content by means of adaptation and covers.
“The strategic cooperation between TME and GMM aims at making sure the Thai music entertainment culture represented by GMM is loved by more and more Chinese consumers,” TMW said. “Through this cooperation, TME hopes to build a music ‘habitat’ for fans of Thai culture.”
TME has more than 800 million monthly active users. As the largest record and publishing company in Thailand, GMM has more than 80% of the music and entertainment market share. In recent years, GMM built a presence in film and television broadcasting and talent management.
TME, which is controlled by Chinese tech giant Tencent Holdings (TCEHY), last week reported that online music revenues in second quarter increased by 42% year-over-year, accelerating from 27.4% in the first quarter, which was mainly attributable to nearly 65% year-over-year growth in music subscription revenues as well as strong performance from digital album sales.
Shares have dropped 10% over the past 5 days but are still up 23% so far this year and analysts still have a cautiously optimistic outlook on the stock with a Moderate Buy consensus. Meanwhile, the $18.44 average price target implies 28% upside potential to current levels.
Oppenheimer analyst Bo Pei last week upgraded TME shares to Buy from Hold with a $20 price target, saying that investors are overlooking the company’s core music business. (See TME stock analysis on TipRanks)
“We believe the potential upsides in the core music segment should more than offset the Social Entertainment headwinds,” Pei wrote in a note to investors. “We expect strong sub growth to continue in 2H and potentially accelerate on ad-supported services. We estimate long-form audio could generate 3%/7% incremental core music revenue in ’21E/’22E.”
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