Bank of America Securities released a research report sayingscratchgithub, reiterated the "Buy" rating of Tencent Music-SW (01698) and raised its target price from HK$51 to HK$71. The Group's comprehensive content ecosystem and diversified user coverage further drive its share growth in China. In addition, structural changes in costs in the music business and optimization of the combination of licensed products and internal products also provide upward space for its profit growth.

The report said that the company's performance in the first quarter was strong and better than expected, benefiting from strong music user growth and better profit margin trends. The bank expects that the strong momentum of the group's music business will continue and boost profits this year. The Group was driven by both improving trends and gradual improvement in average revenue per user (ARPU) in the first quarter, and with a strong music consumption trend during the Lunar New Year, it is believed that user engagement will drive healthy long-term growth this year.

In addition, the Group further expanded the gross profit margin of content leverage in licensing and increased the contribution of high-margin internal music business. The bank believes that a better content mix and a return on investment strategy will continue to drive the expansion of the group's music business and the group's gross margin from 2024 to 26. The bank expects the group's profits to increase by 5% and 3% respectively in fiscal year 2024 - 25.