Lyon: TME-SW (01698) expands market coverage and target price raised to 77.7 Hong Kong dollars.

Lyon issued a research report stating that the valuation benchmark for TME-SW (01698) will be pushed forward to the middle of 2026, and the target price has been raised from 64.69 Hong Kong dollars to 77.7 Hong Kong dollars, maintaining an "outperform" rating. Tencent Music is steadily advancing in the construction of Super VIP (SVIP) benefits, as well as deepening strategic cooperation with SM Entertainment in recent times, enhancing the company's confidence in its evolution into a leading entertainment giant in China and expanding into entertainment markets worth over 100 billion yuan beyond music streaming. Lyon has raised Tencent Music's revenue forecast for the fiscal years 2025 and 2026 by 0.5% and 0.8%, respectively, and adjusted the earnings per share forecast by 0.3% and 1.6% due to Tencent Music's priority in increasing average revenue per paying user (ARPPU), paying user retention rate, and content cost efficiency.