TME
Tencent Music Entertainment Group
$8.38
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 61.3% below fair value
You pay
$8.38
Bear
$16.99
Fair
$21.67
Bull
$26.16
Bear
$16.99
+102.8%
6% stage 1 growth, 11% discount
Fair
$21.67
+158.6%
9% stage 1 growth, 11% discount
Bull
$26.16
+212.2%
12% stage 1 growth, 11% discount
Adjust Assumptions
9.2%
11.0%
3.0%
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
6.6x
Market is pricing in (growth)
-6.7%
vs 9.2% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$12.50
Divergence from AlphaVal
73%
Summary
Using a two-stage FCF DCF with 9% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $21.67 per share.
Warnings
Wall Street's average price target is $12.50 (from 24 analysts). Our estimate is 73% above the consensus -- consider that gap carefully.
Financial statements were converted from CNY into USD using USDCNY at 0.1496 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