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Cloud Music Inc 09899

Morningstar Rating
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Stock XHKG Rating as of
HKD 97.95 −2.55 (2.54%)
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As of Delayed Price Closed
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Company Report

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Cloud Music: Solid Start to 2024; Shares Undervalued

Ivan Su

We maintain our fair value estimate for Cloud Music following its parent company, NetEase's recent earnings release, which provided insights into Cloud Music's financial performance for the first quarter of 2024. Cloud Music only publishes financial reports on an interim basis. The revenue for Cloud Music increased by 4% year over year, driven by an acceleration in music subscription growth. However, this was partly offset by a decline in live streaming-related revenue.

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Price vs Fair Value

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09899 is trading at a 213% premium.
Price
HKD 97.95
Fair Value
HKD 562.00
Uncertainty
High
1-Star Price
HKD 913.86
5-Star Price
HKD 19.10
Economic Moat
Bbc
Capital Allocation
Myslygzmf

Bulls Say, Bears Say

Bulls

Termination of exclusive deals with music labels by Tencent Music would present opportunities for Cloud Music to bridge the gap in music content and post robust top-line growth.

Bears

Increasing content cost, marketing and R&D expenses would keep Cloud Music in a loss-making state over the next few years.

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Trading Information

Previous Close Price
HKD 100.50
Day Range
HKD 94.50–100.50
52-Week Range
HKD 66.10–110.10
Bid/Ask
HKD 97.90 / HKD 97.95
Market Cap
HKD 21.11 Bil
Volume/Avg
133,075 / 207,495

Key Statistics

Price/Earnings (Normalized)
22.89
Price/Sales
2.38
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
2.00%

Company Profile

Cloud Music is the second largest online music service provider in China. It was founded in 2013 by NetEase, which currently holds around 58% of its equity stake and 90% of voting power. The business model of Cloud Music resembles that of its main competitor Tencent Music, as both provide music streaming services to their users plus social entertainment features such as livestreaming.
Sector
Communication Services
Industry
Internet Content & Information
Stock Style Box
Mid Growth
Total Number of Employees
1,359
Website
http://ir.music.163.com

Competitors

Valuation

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Metric
09899
TME
SIRI
Price/Earnings (Normalized)
 22.8925.646.80
Price/Book Value
 2.242.90—
Price/Sales
 2.385.811.14
Price/Cash Flow
 41.4519.574.73
Price/Earnings
09899
TME
SIRI

Financial Strength

Metric
09899
TME
SIRI
Quick Ratio
 3.432.420.22
Current Ratio
 3.652.670.35
Interest Coverage
 1,041.3846.804.69
Quick Ratio
09899
TME
SIRI

Profitability

Metric
09899
TME
SIRI
Return on Assets (Normalized)
 7.34%8.61%14.48%
Return on Equity (Normalized)
 10.20%11.56%—
Return on Invested Capital (Normalized)
 4.90%8.94%26.99%
Return on Assets
09899
TME
SIRI
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