Tencent Music Entertainment Group (TME) Slid on Rising Competition and Margin Dilution

3 days ago 8

Soumya Eswaran

Thu, February 12, 2026 astatine 9:28 AM CST 3 min read

Sustainable Growth Advisers (SGA), an concern absorption company, released its fourth-quarter capitalist missive for its “Emerging Markets Growth Strategy.” A transcript of the missive tin beryllium downloaded here. The 4th fourth of 2025 marked beardown divergence from the market. Market enactment by AI beneficiaries and revival of cyclical sectors dominated the market, portion prime maturation strategies faced challenges. In Q4 2025, the portfolio returned 0.8% (Gross) and 0.6% (Net) compared to the MSCI EM Net TR Index instrumentality of 4.7% and the MSCI EM Growth Net TR Index instrumentality of 3.3%. In 2025, the portfolio delivered beardown returns of 23.8% (Gross) and 22.8% (Net) but lagged the 33.6% and 34.3% returns for the indexes, respectively. The portfolio projects 13% gross maturation and 16% net maturation annually for the adjacent 3 years. Please reappraisal the Strategy’s apical 5 holdings to summation insights into their cardinal selections for 2025.

In its fourth-quarter 2025 capitalist letter, SGA Emerging Markets Growth Strategy highlighted Tencent Music Entertainment Group (NYSE:TME) arsenic a notable detractor. Tencent Music Entertainment Group (NYSE:TME) is an online euphony amusement level that provides euphony streaming, online karaoke, and unrecorded streaming services. On February 11, 2026, Tencent Music Entertainment Group (NYSE:TME) banal closed astatine $16.94 per share. One-month instrumentality of Tencent Music Entertainment Group (NYSE:TME) was 2.05%, and its shares are up 32.76% implicit the past 12 months. Tencent Music Entertainment Group (NYSE:TME) has a marketplace capitalization of $28.53 billion.

SGA Emerging Markets Growth Strategy stated the pursuing regarding Tencent Music Entertainment Group (NYSE:TME) successful its 4th fourth 2025 capitalist letter:

"Tencent Music Entertainment Group (NYSE:TME) was a detractor during the quarter, arsenic concerns astir rising contention and borderline dilution weighed connected capitalist sentiment contempt beardown top- and bottom-line results. The continued maturation of Soda Music, backed by Douyin’s traffic, raised questions astir their imaginable interaction to the semipermanent competitory dynamics, peculiarly astatine the little extremity of the marketplace wherever monetization remains challenging. Additionally, investments successful caller verticals specified arsenic concerts and merchandise, portion strategically valuable, are expected to unit gross margins successful the coming year. However, we presumption these initiatives arsenic charismatic arsenic they are accretive to wide profits and should assistance further differentiate the level to thrust SVIP (Super VIP) adoption which increases mean gross per paying idiosyncratic (ARRPU). We proceed to judge successful TME’s semipermanent maturation prospects and competitory vantage fixed its differentiated contented ecosystem, beardown brand, and quality to innovate and seizure caller opportunities crossed China’s evolving euphony industry. However, we continued to trim the presumption successful the 4th to a below-average value connected comparative valuation aft beardown show successful the archetypal fractional of 2025."