The Zhitong Finance App learned that Citibank released a research report saying that Tencent Music-SW (01698) management indicated that in the third quarter and second half of this year, the net increase in future users, average monthly income and competitive space for individual paying users is slowing down.

The report quoted management as explaining that earlier this year, the traditional Lunar New Year discount was given to a larger percentage of users this year, leading to excessive absorption of non-sticky users. In the third quarter, combined with seasonal weakness, the net increase in users was lower than normal. Management said it has noted the importance of a net increase in high-quality users and has reaffirmed the target of 0.15 billion total users in the medium term. The industry expects this target to be achieved by the end of 2028.

According to the report, in the second half of the year and in the next few years, the average monthly revenue of individual paying users of online music services will gradually resume relatively rapid growth in the second half of the year and the next few years. The market's figure for the fourth quarter is expected to rise from RMB 10.7 in the second quarter to RMB 11.13. In addition, the company claims that online concerts have less competition for longer films and their insurance business. Citi said it agreed that the company pursues high-quality paying user practices, and profit growth is more sustainable. In the face of a macroeconomic slowdown and the resilience of the music industry, the bank believes that Tencent Music is defensive, especially with improved profits and a steady revenue track record, which also seems to be sustainable.