Citi's research report reveals that Tencent Music delivered better-than-expected revenue and earnings in the third quarter, and it has a relatively optimistic outlook for the fourth quarter as well. Nevertheless, following the earnings announcement, the price of its American depositary shares dipped. This decline may stem from increased investor risk aversion and a prudent attitude towards ByteDance's competitive standing. Citi, however, deems this sell-off to be unfounded and sees it as a favorable chance to build up investments.

The report highlights that Tencent Music is leveraging its in-depth understanding of music industry operations to bolster its capability in constructing a comprehensive one-stop music ecosystem platform. This strategic move aims to enhance the music streaming experience, drive revenue growth, and foster talent development. Notably, the user base attracted by Tencent Music stands out for its quality. Moreover, its capacity to integrate Tencent's gaming, film, and television intellectual properties (IPs) contributes to clarifying the value proposition for both users and artists.

Citi reaffirms its 'Buy' recommendation for Tencent Music and keeps its target price for the American depositary shares at US$29.