According to a report by China Securities, Cloud Music (09899.HK) management has indicated that the future will focus on expanding the size of online music users, and increasing the average revenue per paying user (ARPPU) is not a priority given the current market share. THE ONLINE MUSIC BUSINESS GREW WELL IN THE FIRST HALF OF THE YEAR AND PROFIT MARGIN IMPROVED, GRADUALLY APPROACHING THE LEVEL OF PEER TENCENT MUSIC-SW (01698.HK) (TME.US), AND LONG-TERM PROFIT MARGINS ARE EXPECTED TO MAINTAIN SOLID GROWTH.

Revenue in the cloud music social entertainment business fell 20% year-on-year in the first half, down 42% compared to the second half of 2023, and the bank expects the weakness of the social entertainment business to continue to negatively impact the Group's operations in the second half, and expects revenue to decline by 23% year-on-year until next year's decline eases.

China Securities lowered its revenue forecast for the next two years to 3% and 6.5% year-on-year growth for Cloud Music to 3% and 6.5% YoY. Based on strong interim results, it raised its core operating profit forecast to 154.3% and 11.8% YoY, and raised its net profit forecast by 9% and 4% to 1.341 billion and nearly RMB 1.4 billion, and rated “Increase”. The benchmark price increased from HK$143 to HK$152.