TME
Tencent Music Entertainment Group
$8.68
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 60.9% below fair value
You pay
$8.68
Bear
$17.18
Fair
$22.17
Bull
$27.01
Bear
$17.18
+98.0%
6% stage 1 growth, 11% discount
Fair
$22.17
+155.5%
10% stage 1 growth, 11% discount
Bull
$27.01
+211.4%
12% stage 1 growth, 11% discount
Adjust Assumptions
9.6%
11.0%
3.0%
Key Value Driver
FCF growth rate (10% base case)
Terminal Value % of EV
39%
Implied Market Multiple
6.9x
Market is pricing in (growth)
-5.9%
vs 9.6% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$15.22
Divergence from AlphaVal
46%
Summary
Using a two-stage FCF DCF with 10% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $22.17 per share.
Warnings
Wall Street's average price target is $15.22 (from 24 analysts). Our estimate is 46% above the consensus -- consider that gap carefully.
Financial statements were converted from CNY into USD using USDCNY at 0.1488 USD per CNY.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions