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Cloud Music Inc 09899

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Stock XHKG Rating as of
HKD 94.45 −0.65 (0.68%)
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As of Delayed Price Closed
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Company Report

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Cloud Music Is Set for Long-Term Subscriber Growth and Margin Improvement

Ivan Su

Cloud Music is the second largest music streaming platform in China, with over 180 million monthly active users, about one third that of Tencent Music Entertainment’s, or Tencent Music. As exclusive licensing practices have been prohibited by China’s antitrust laws, we believe Cloud Music should now grow its content through direct licensing from music labels at costs lower than sublicensing from Tencent Music. This could allow it to grow subscribers rapidly and gain market share in the music streaming industry.

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Price vs Fair Value

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09899 is trading at a 42% discount.
Price
HKD 89.00
Fair Value
HKD 297.00
Uncertainty
High
1-Star Price
HKD 919.92
5-Star Price
HKD 11.60
Economic Moat
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Capital Allocation
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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 95.10
Day Range
HKD 92.05–94.80
52-Week Range
HKD 66.10–106.00
Bid/Ask
HKD 94.45 / HKD 94.55
Market Cap
HKD 20.25 Bil
Volume/Avg
76,800 / 140,069

Key Statistics

Price/Earnings (Normalized)
22.07
Price/Sales
2.30
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
2.08%

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
https://ir.music.163.com

Competitors

Valuation

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Metric
09899
SPOT
TME
Price/Earnings (Normalized)
 22.07397.5224.27
Price/Book Value
 2.1616.132.79
Price/Sales
 2.303.805.20
Price/Cash Flow
 39.97101.2422.44
Price/Earnings
09899
SPOT
TME

Financial Strength

Metric
09899
SPOT
TME
Quick Ratio
 3.431.382.22
Current Ratio
 3.651.422.49
Interest Coverage
 1,041.38−2.1441.27
Quick Ratio
09899
SPOT
TME

Profitability

Metric
09899
SPOT
TME
Return on Assets (Normalized)
 7.34%3.49%8.71%
Return on Equity (Normalized)
 10.20%11.24%11.80%
Return on Invested Capital (Normalized)
 4.90%5.13%9.06%
Return on Assets
09899
SPOT
TME
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