Report by Hedgeye
The most well-communicated beat in TME's history happened last week and it wasn't impressive. That is according to Felix Wang, who says the market is pricing TME as a high growth company which it is certainly not. 2023 will be no different. The stock is way ahead of itself (up >75% since Q3 earnings) even though the revenue decline in Q4 improved from 6% to 3%. Big whoop. The huge lift from the new music albums (Jay Chou, BLACKPINK, etc) will dissipate in 1Q23. The profitability gains in 2022 is mainly due to a 60% decline in marketing costs (ex stock comp) but that bottomed as a % of revenues. Felix believes TME does not deserve to trade at a forward P/E multiple higher than 10x.