Tencent Music’s IPO Filing Reflects Record Streaming Profits

When Chinese conglomerate Tencent Holdings unveiled its plan to list its music division on Wall Street, it was poised to become one of the largest companies to list on the stock market. With a valuation of over $25 billion, Tencent Music Entertainment (TME) was poised to become the second-largest tech IPO launch of 2018, following Spotify’s traditional non-IPO direct listing. Other Chinese tech companies also have had success on Wall Street this year like in March, iQiyi, a Chinese streaming video company which went public with a $2.4 billion valuation and in July, Pinduoduo, an e-commerce discount platform, launched its IPO with a $1.6 billion valuation. TME IPO Launch Tencent Music delayed its IPO launch, originally scheduled for October 18^th and now the stock will now go public on December 12th due to turbulent market conditions. The company hopes to raise up to $1.41 billion from the IPO and it’s underwritten by Morgan Stanley, JP Morgan, Goldman Sachs, Deutsche, and BofA Merrill Lynch. The Tencent Music stock price will list at a price between $13 and $15. The company also remains incredibly healthy and regularly turns a profit, unlike its competitor Spotify and also continues to grow. For the quarter ended September 30^th, 2018, Tencent Music’s revenue reached ¥13.6 billion ($2 billion).  This number has increased by 83.7% over the same period last year when the company reported ¥7.4 billion ($1.1 billion) in revenue. In addition, Tencent Music revealed its profit for the nine months ended 2017 and 2018 reached ¥785 million ($114.5 million) and ¥2.7 billion ($394 million), respectively. In the nine months ended September 30^th, 2018, Tencent Music’s adjusted profit reached ¥3.3 billion ($474 million).  This marks a 162.9% increase over the same period last year when the company reported ¥1.2 billion ($180.7 million). In total, Tencent Music grew more than 10% over the previous quarter.  The company also grew 71% over the same period last year. The IPO launch can only be positive for such a cash-positive company which is touted to grow much more compared to its western counterparts.

You can view the complete F1/A filing here.