NETEASE MUSIC (09899) surged over 5%, gaining 5.12% to HK$291.8 with trading volume reaching HK$120 million as of press time.

On the news front, NETEASE MUSIC recently released its first half 2025 financial results. China Merchants Securities International noted that NETEASE MUSIC's first-half performance exceeded expectations, with online music service revenue reaching RMB 2.97 billion, up 16% year-on-year (in line with expectations) and accounting for 78% of total revenue. Gross margin improved by 1.4 percentage points year-on-year to 36.4%, surpassing market expectations of 34.1%. Core operating profit grew 35% year-on-year to RMB 905 million, 40% higher than market expectations, with net cash reserves of RMB 12.4 billion at period end.

Looking ahead, the firm expects online music business to drive overall group revenue to positive year-on-year growth in the second half of 2025, with the online music segment growing at 17% year-on-year.

Huatai Securities pointed out that compared to overseas peers, the long-term quality asset attributes of domestic music platforms have not been fully priced in. From a growth perspective, the payment rate of domestic music platforms still has upward potential as user age structure optimizes, and fan economy strategies are expected to activate the payment potential of highly sticky core users. In terms of profitability, domestic streaming platforms continue to deepen upstream and downstream deployment, with profit ceilings superior to overseas platforms. From a valuation standpoint, current valuations remain cost-effective compared to overseas peers.