Major Bank Rating | Nomura: Tencent Music’s Q1 and full-year guidance below expectations, maintains “Buy” rating

格隆汇 March 18｜Nomura released a report stating that Tencent Music's revenue in the last quarter of last year exceeded expectations, and its profit was roughly in line with expectations; however, the guidance for the first quarter and the full year of 2026 was below expectations, reflecting intensified market competition. Management expects total revenue in the first quarter of this year to grow by 7% year-on-year, reaching 7.9 billions yuan, which is 5% lower than market forecasts. Among them, music subscription revenue is expected to increase by 6% year-on-year, far below the market expectation of 13%, mainly due to low pricing strategies from competitors such as Soda Music. Non-subscription online music service revenue is expected to grow by 26% year-on-year to 2.0 billions yuan, roughly in line with market expectations. Management acknowledges that competition is intensifying and emphasizes that music subscription revenue may face some short-term pressure this year; however, they also point out that competition is not a new concern, as the company's past performance has proven its ability to remain flexible and compete effectively, maintaining confidence in this regard. The bank maintains its "Buy" rating on the stock, with a target price of $26 for US shares unchanged.