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TME: Increase In Paying Users Drive Solid Online Music Service Performance In 2Q23

TME will report 2Q23 results on August 15th before the markets open with an 8am ET conference call. We are positive on TME’s performance in 2Q23 and outlook for 2023. The long-awaited economic stimulus policies have started to come out since late July 2023. On June 25th, the State Think Tank CMF released its paper “Solidifying Foundation for Recovery, China’s Macroeconomy in 2023”. The paper not only pointed out 5 main issues but also emphasized that these issues cannot be resolved by themselves and need state driven stimulus. We believe the paper has set up the direction for the stimulus. On July 24th, the Political Bureau of the CPC Central Committee held a meeting analyzing the current economic situation and pointing out the direction and framework for economic stimulus. In the past weeks after this meeting, we have already witnessed the positive reaction in China’s market. We believe the stimulus is likely to provide a supporting floor to consumption growth in China. Paying users of online music are likely to increase 20% Y/Y.