H.E.R.O.’s Journey in Tech (18 August 2018) – Does Tencent Music Deserve a Spotify-Like Valuation?

H.E.R.O.’s Journey in Tech (18 August 2018) – Does Tencent Music Deserve a Spotify-Like Valuation?


  • Does Tencent Music Deserve a Spotify-Like Valuation? Tencent Music this year could generate revenue less than half of Spotify’s projected $6 billion. Tencent Music is profitable, which is rare in music-streaming. The firm pulled in roughly two billion yuan ($290 million) in net income last year. Spotify, in contrast, reported a net loss of about $1.4 billion last year, although nearly $1 billion of that was due to a one-time financing charge. In terms of users, Tencent Music is way bigger than Spotify. Tencent Music operates streaming service QQ Music as well as karaoke and live-streaming music apps Kugou and Kuwo. The three services had a combined 700 million monthly users in China as of September 2017, according to Tencent Music. Tencent Music operates a fourth service, the karaoke app WeSing, which at the end of last year had more than 460 million registered users. By comparison, Spotify had 180 million monthly users and 83 million paid subscribers as of June, the company has said. But Spotify’s ratio of paid versus free users is higher than at Tencent Music, where only a fraction of its Chinese users pay for music. The secret of Tencent Music’s profitability is virtual goods and cheap music rights. Most of its revenue comes from non-subscription services including karaoke and live-streaming services, where users can pay to send virtual gifts to performers (The Info)
  • Apple supplier Luxshare plans camera module IPO as next leap; Chinese company’s growth threatens rivals in Taiwan and South Korea (Nikkei)
  • China’s online pharmacy 1Yaowang seeks $200m NYSE IPO (KRA)
  • On-demand app Grab, which operates across Southeast Asia, is moving into healthcare, through a joint venture with Ping An Good Doctor (KRA)
  • Foxconn Pursues Chip Ambitions With Plans for China Plant (WSJ)
  • Kakao Bank gives regional lenders a run for their money (Investor)

BATTSS – Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung

  • Chinese internet stock sell-off may shake faith in FANGs (Reuters)
  • Samsung’s Galaxy empire in crisis; Amid strong competition from Chinese rivals, smartphone leader looks for innovation; semiconductor business is the largest contributor to its earnings, posting 35.2 trillion won in operating profit, or 65.6% of Samsung’s total operating profit (Nikkei)

FAANNMG – Facebook, Amazon, Apple, Nvidia, Netflix, Microsoft, Google

  • Why Amazon Picked Taiwan For Its Latest Innovation Center (Forbes)
  • Tivo drops on report that Amazon is considering live TV recorder (FT)
  • Amazon’s Dominance in Ecommerce (Visual)

  • Google always watching, even when location tracking turned off (AFR)

Asia Tech & Innovation Trends

  • China’s ride-hailing resurgence is just another step into the future of mobility (Technode)
  • Online health care service puts Grab and Go-Jek on collision course; Ride-hailing rivals fight it out in Indonesia with mostly mirror-image services (Nikkei)

Global Tech & Innovation Trends

  • Farmers Business Network: Data farming; FBN has built a network of more than 6,500 farms to which it offers information, an online store and marketing help—all with the goal of making farmers more profitable (Forbes)
  • Late to the Driverless Revolution: America’s car industry dismissed the potential of autonomous driving for years as tech companies plunged ahead. Now Detroit is racing to catch up. (WSJ)

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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