FAST NEWS: Tencent Music to Make Second Listing in Hong Kong

The latest: New York-listed Tencent Music Entertainment Group (TME.US; 1698.HK) announced Thursday it will make a second listing in Hong Kong using a method called “by way of introduction,” which does not involve issuing new shares. Trading for the new listing is expected to begin next Wednesday.

Looking up: Earlier this year, Tencent Music was placed on a growing list of Chinese companies that could be forcibly delisted in the U.S. for failing to comply with U.S. law. Thus, its new Hong Kong listing will help it to maintains its status as a public company even if it is delisted in the U.S. in the future.

Take Note: As Tencent Music will be listed by way of introduction, no sale of any shares will take place and the company and its parent, Tencent Holdings (0700.HK), will not receive any funds.

Digging Deeper: Tencent Music is China’s dominant online music services provider, formed by the merger of China Music Corp. and Tencent’s own digital music business in July 2016. It raised $1.07 billion in a U.S. IPO in late 2018. The company has faced troubles in recent years, including a 500,000 yuan ($72,000) fine last year for monopolistic practices. As a result of corrective actions to satisfy the market regulator, the company took a hit from the loss of exclusive rights to many of its titles through master licensing agreements with major record labels. Its revenue fell 15% and 13.8% year-over-year in the first two quarters of this year, respectively.

Market Reaction: Tencent Music’s New York-traded shares rose 0.42% to $4.78 on Wednesday before the announcement. Its parent Tencent rose slightly in the early trading on Thursday in Hong Kong, closing up 0.1% at HK$300 by the midday break.

Translation by Jony Ho

To subscribe to Bamboo Works free weekly newsletter, click here