As China's capital market continues to strengthen, investors are increasingly reassessing the value of high-quality assets. Against this backdrop, industry leaders with both value and growth attributes—such as Tencent Music (01698), which recently reported robust earnings—are attracting significant attention.

On November 12, Tencent Music released its unaudited financial results for Q3 2025. The company reported total revenue of RMB 8.46 billion (up 20.6% YoY) and non-IFRS net profit of RMB 2.48 billion (up 27.7% YoY), demonstrating steady growth momentum.

The strong performance was primarily driven by the online music business, particularly subscription services. Paid users grew 5.6% YoY to 125.7 million, while average revenue per paying user (ARPPU) rose 10.2% to RMB 11.9. This "volume and price growth" dynamic pushed online music subscription revenue up 17.2% to RMB 4.5 billion. Additionally, non-subscription revenue from concerts, artist merchandise, and advertising services contributed to high-quality growth.

Over the long term, Tencent Music has shown consistent resilience. Adjusted net profit grew 26.8% in 2023 and 30.7% in 2024, with Q3 2025 sustaining a 27.7% YoY increase.

The company’s growth engine stems from its "One Body, Two Wings" strategy, which shifts focus from user expansion to deepening user value. By refining content and platform operations, Tencent Music enhances engagement and monetization, boosting super member penetration and ARPPU.

**Content Strategy:** Tencent Music continues to diversify its offerings with global content, strengthening its international presence. Initiatives like the inaugural TIMA International Music Awards and hosting G-DRAGON’s sold-out 2025 WORLD TOUR [Übermensch] across six cities (attracting over 150,000 attendees) have elevated its brand.

**Platform Innovation:** The company has upgraded interactive experiences and membership tiers, catering to varied user needs. Exclusive perks—such as early access to Eason Chan’s digital album *FEAR and DREAMS*—have driven super member sign-ups. Expanded artist interactions (e.g., adding 15 new Bubble artists like Hu Xia and NexT1DE) further enrich engagement.

**Growth Drivers:** 1. **Rising Paying Users:** UBS notes Gen Z’s entertainment spending is 1.32x the average, underpinning long-term potential. 2. **ARPPU Growth:** Differentiated content and services (e.g., SVIP benefits) support sustainable ARPPU increases, as highlighted by CICC. 3. **New Revenue Streams:** International expansion, partnerships (e.g., film and automotive), and artist-related businesses (concerts, merchandise) are unlocking fresh opportunities.

Tencent Music’s "flywheel effect"—where content and platform enhancements deepen user value, fueling reinvestment—creates a virtuous cycle. This positions the company for durable growth, contrasting with Spotify’s past profitability struggles.

Analysts remain bullish: CICC raised profit forecasts and target prices, citing SVIP momentum and non-subscription growth. Goldman Sachs lifted long-term revenue and EPS projections by 2-7%, reflecting margin expansion and ARPPU gains.

Given its resilient fundamentals and limited downside risk, Tencent Music presents a compelling investment opportunity during market dips.