Initiating on Tencent Music's Hong Kong Listing With HKD 31.40 FVE

We initiate coverage of Tencent Music’s Hong Kong shares following its secondary listing on Sept. 21. No new shares were issued by Tencent Music as the listing was completed by way of introduction. We maintain our valuation for the firm, which translates into a fair value estimate of HKD 31.40 for the Hong Kong listing and $8.00 for the U.S. listing. The company's ADR will remain its primary listing and continue to trade on the New York Stock Exchange. We think the Hong Kong secondary listing will help in case of a forced delisting of Chinese ADRs, though the risk has significantly diminished following the audit agreement between the Public Company Accounting Oversight Board and Chinese authorities.