TME
Tencent Music Entertainment Group
$8.81
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 61.4% below fair value
You pay
$8.81
Bear
$16.80
Fair
$22.82
Bull
$28.94
Bear
$16.80
+90.7%
7% stage 1 growth, 11% discount
Fair
$22.82
+159.1%
11% stage 1 growth, 11% discount
Bull
$28.94
+228.4%
15% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (11% base case)
Terminal Value % of EV
40%
Implied Market Multiple
7.2x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $17.82 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $22.82 per share.
Warnings
Wall Street's average price target is $17.82 (from 24 analysts). Our estimate is 37% above the consensus -- consider that gap carefully.
Financial statements were converted from CNY into USD using USDCNY at 0.1472 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