Tencent Music Earnings: Business Adjustments Weigh on Revenue Outlook but Margin Expansion Intact

Narrow-moat Tencent Music's second-quarter earnings were in line with our and Refinitiv’s consensus expectations. Management lowered revenue guidance on continued livestreaming weakness but remains optimistic about margin expansion for the rest of this year. Overall, we are maintaining our $12.50 fair value estimate, and we continue to believe shares are undervalued. We think investors are underestimating the size of its long-term subscriber base and further margin expansion opportunities as the firm grows the top line.