【招银国际】Membership and ad businesses remain under pressure; eye on short-drama development-250117（5页）.pdf

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1、 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG:RESP CMBR OR http:/.hk 1 MN 17 Jan 2025 CMB International Global Markets|Equity Research|Company Update iQIYI(IQ US)Membership and ad businesses remain under pressure;eye on short-drama developm

2、ent We expect iQiyis 4Q24E total revenue to decline by 14%YoY to RMB6.6bn,largely in line with our previous expectation and consensus.The decrease was primarily due to the light content slate in Oct 2024 and the decline in revenue from barter transactions(minor impact on gross profit);but overall co

3、ntent performance started to recover after the launch of several key dramas like Wo Shi Xing Jing in Nov.We forecast non-GAAP operating profit to grow by 7%QoQ to RMB395mn in 4Q24E,ahead of our previous expectation(RMB360mn)thanks to the stringent content cost control.Looking into 2025,we expect the

4、 competition in online video sector to remain intense,and this led us to be more conservative on the future revenue and earnings recovery.We trim FY25-26 total revenue forecasts by 7-10%and lower our target price to US$3.00 based on 12x FY25E PE(previous:US$4.50 on 15x FY25 PE).Maintain BUY.Content

5、performance started to recover from November onwards.By segment:1)we estimate membership revenue to decline by 15%YoY and 6%QoQ to RMB4.1bn in 4Q24E.Overall content performance started to recover after the launch of several key dramas such as Wo Shi Xing Jing and Let Wind Goes By in Nov and Dec 2024

6、,which should support the revenue growth in 1Q25;2)we forecast online advertising revenue to decrease by 13%YoY but grow by 7%QoQ to RMB1.4bn in 4Q24E.The QoQ growth was primarily driven by the growth in brand advertising,which benefited from the launch of several key dramas and the increase in ad s