Critical Review: Tencent Music Entertainment Group (NYSE:TME) vs. HUYA (NYSE:HUYA)
by Tristan Rich · The Markets DailyHUYA (NYSE:HUYA – Get Free Report) and Tencent Music Entertainment Group (NYSE:TME – Get Free Report) are both communication services companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.
Insider and Institutional Ownership
23.2% of HUYA shares are owned by institutional investors. Comparatively, 24.3% of Tencent Music Entertainment Group shares are owned by institutional investors. 1.2% of HUYA shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares HUYA and Tencent Music Entertainment Group”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| HUYA | $6.89 billion | 0.08 | -$16.10 million | ($0.06) | -38.08 |
| Tencent Music Entertainment Group | $33.93 billion | 0.37 | $1.54 billion | $0.81 | 9.77 |
Tencent Music Entertainment Group has higher revenue and earnings than HUYA. HUYA is trading at a lower price-to-earnings ratio than Tencent Music Entertainment Group, indicating that it is currently the more affordable of the two stocks.
Dividends
HUYA pays an annual dividend of $0.12 per share and has a dividend yield of 5.3%. Tencent Music Entertainment Group pays an annual dividend of $0.23 per share and has a dividend yield of 2.9%. HUYA pays out -200.0% of its earnings in the form of a dividend. Tencent Music Entertainment Group pays out 28.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. HUYA is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares HUYA and Tencent Music Entertainment Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| HUYA | -1.59% | 0.20% | 0.14% |
| Tencent Music Entertainment Group | 26.27% | 11.53% | 8.87% |
Analyst Ratings
This is a breakdown of current recommendations for HUYA and Tencent Music Entertainment Group, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| HUYA | 1 | 1 | 1 | 1 | 2.50 |
| Tencent Music Entertainment Group | 0 | 10 | 3 | 0 | 2.23 |
HUYA presently has a consensus target price of $3.45, indicating a potential upside of 50.98%. Tencent Music Entertainment Group has a consensus target price of $17.21, indicating a potential upside of 117.42%. Given Tencent Music Entertainment Group’s higher probable upside, analysts plainly believe Tencent Music Entertainment Group is more favorable than HUYA.
Volatility and Risk
HUYA has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Tencent Music Entertainment Group has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500.
Summary
Tencent Music Entertainment Group beats HUYA on 11 of the 17 factors compared between the two stocks.
About HUYA
HUYA Inc., together with its subsidiaries, operates game live streaming platforms in the People's Republic of China. Its platforms enable broadcasters and viewers to interact during live streaming. The company's live streaming content also covers other entertainment content, such as talent shows, anime, outdoor activities, live chats, and other genres. In addition, it operates Nimo TV, a game live streaming platform in international markets. Further, the company provides online advertising, cnt, internet value added, and cultural and creative services. The company was founded in 2014 and is headquartered in Guangzhou, China. HUYA Inc. is a subsidiary of Tencent Holdings Limited.
About Tencent Music Entertainment Group
Tencent Music Entertainment Group operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People's Republic of China. It offers QQ Music, Kugou Music, and Kuwo Music that enable users to discover music in personalized ways; long-form audio content, including audiobooks, podcasts and talk shows, as well as music-oriented video content comprising music videos, live performances, and short videos; and WeSing, which enables users to sing along from its library of karaoke songs and share their performances in audio or video formats with friends. The company also delivers music-centric live streaming services primarily through the Live Streaming tab on QQ Music, Kugou Music, Kuwo Music, WeSing, Kugou Live, and Kuwo Live that provides an interactive online stage for performers and users to showcase their talent and engage with a diverse audience base; and Lazy Audio, an audio platform. In addition, it sells music-related merchandise; and artist-related merchandise, such as branded apparel, posters and art prints, and accessories and integrated and technology-driven music solutions that help IoT device manufacturers build and operate their branded music services on their IoT devices, as well as offers advertising services across its online karaoke platform and online music apps. The company is headquartered in Shenzhen, China. Tencent Music Entertainment Group is a subsidiary of Tencent Holdings Limited.