Investment Rating - The report maintains a "Strong Buy" rating for Cloud Music [1][2][3] Core Views - The company reported a revenue of 7.87 billion HKD in 2023, a decrease of 12.5% year-on-year, but achieved a net profit of 730 million HKD, recovering from a loss of 220 million HKD in 2022 [1][2] - The online music service revenue increased by 17.6% year-on-year to 4.35 billion HKD, driven by a significant rise in subscription revenue [2] - The company has optimized music copyright costs, with a 30.5% year-on-year decrease in copyright amortization costs, leading to profitability in its membership business [2][3] Summary by Sections Financial Performance - In 2023, the company achieved a revenue of 7.87 billion HKD, down 12.5% from 2022, while net profit reached 730 million HKD, a turnaround from a loss of 220 million HKD in 2022 [1][2] - Adjusted net profit for 2023 was 820 million HKD, compared to a loss of 110 million HKD in 2022 [1] Revenue Breakdown - Online music service revenue was 4.35 billion HKD, up 17.6% year-on-year, with subscription revenue contributing 3.65 billion HKD, a 20.2% increase [2] - Social entertainment services and other revenues were 3.52 billion HKD, down 33.6% year-on-year due to improved management of live streaming and social traffic monetization [2] Cost Management - The company's operating costs were 5.76 billion HKD, a decrease of 25.1% year-on-year, resulting in a gross margin of 26.7%, up 12.3 percentage points [2] - The company has focused on cost optimization, leading to improved operational efficiency and profitability for 2024 [2][3] User Engagement - The platform had 206 million monthly active users in 2023, an increase of 8.7% year-on-year, with a strong user engagement reflected in a daily active user to monthly active user ratio of over 30% [3] - The company plans to enhance product innovation in 2024, particularly leveraging advancements in AI technology to improve user experience [3] Profit Forecast - The report forecasts net profits of 1.05 billion HKD, 1.47 billion HKD, and 1.99 billion HKD for 2024, 2025, and 2026 respectively, with corresponding PE ratios of 17X, 12X, and 9X [3][5]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company has demonstrated continuous improvement in gross margin, leading to enhanced profitability, and is now on a fast track for profit growth [6] - The company achieved total revenue of 7.939 billion (RMB) in 2023, a year-on-year decrease of 11.75%, primarily due to a cautious operational strategy that reduced live streaming displays and lowered revenue sharing ratios [6] - The net profit attributable to shareholders for 2023 was 734 million (RMB), compared to a loss of 221 million (RMB) in 2022, with a gross margin of 26.7%, up 12.4 percentage points year-on-year [6] - The increase in gross margin is attributed to the rise in online music service revenue share from 41% in 2022 to 55% in 2023, along with improvements in copyright cost structure and revenue sharing ratios [6] - The company is expected to continue its profitability improvement, with net profit forecasts for 2024, 2025, and 2026 at 1.008 billion, 1.281 billion, and 1.444 billion (RMB) respectively [6] Summary by Sections Financial Performance - In 2023, the company reported total revenue of 7.939 billion (RMB), down 11.75% year-on-year, while net profit was 734 million (RMB), a significant recovery from a loss of 221 million (RMB) in 2022 [6] - The gross margin improved to 26.7%, and the net margin reached 9.3%, reflecting a year-on-year increase of 12.4 percentage points and 11.7 percentage points respectively [6] User Growth and Engagement - The company’s online music platform reached 206 million monthly active users in 2023, an increase of 8.7% year-on-year, with a daily active to monthly active user ratio exceeding 30% [7] - The number of independent musicians on the platform grew to 684,000, up 11.9% year-on-year, and the online music service membership reached 44.12 million, a 15% increase [7] Technological Advancements - The company is accelerating the application of AI technology in music production and consumption, with a one-stop AI music creation tool developed by its AI music lab [8] - The expansion into multiple consumption scenarios aims to enhance music monetization opportunities, leveraging AI to reduce content costs and broaden content supply [8]

[Table_Page] 公告点评|媒体Ⅱ 证券研究报告 [T[【aTbalbel_eS_uTmi广tlem] ary] 发 传 媒 & 海 外 】 云 音 乐 [公Tab司le_评Inve级st] 买入 当前价格 90.45港元 （09899.HK） 合理价值 110.05港元 前次评级 买入 音乐社区为基石，24 年会员有望加速增长 报告日期 2024-03-03 核心观点： 相[Ta对ble市_P场icQ表uot现e]  公司发布2023年业绩：云音乐23年实现收入78.67亿元人民币，同 20.0% 云音乐 恒生指数 比下滑13%，vs.彭博一致预期（下同）为78.69亿元。23年毛利率为 0.0% 26.7%，vs.一致预期为26.1%，同比提升12.3pct。23年净利润为7.34 -20.0% 亿元，vs.一致预期为 5.49 亿元。经调整净利润为 8.19 亿元，利润率 -40.0% 为10%，vs.一致预期为6.29亿元，22年同期为1.15亿亏损。 -60.0%  未来仍更注重用户增长和社区差异化建设，基于音乐和社区的商业化 -80.0% 能力逐步夯实。23年MAU达2.06亿，同比提 ...

2024年3月2日 公司研究 差异化内容+产品创新，首次实现全年盈利 ——云音乐（9899.HK）2023 年业绩点评 要点 增持（维持） 当 前价：90.45港元 事件：公司发布23年全年业绩，实现营收78.67亿元人民币，同比下降12.5%， 主要系主动调整社交娱乐运营策略。23年公司盈利能力显著改善，实现毛利润 21.03亿元，同比上升62.6%，对应毛利率由22年的14.4%大幅提升至26.7%， 作者 系在线音乐业务商业化表现强劲、版权成本结构及收入分成比例改善所致；公司 分析师：付天姿 CFA，FRM 实现经调整净利润8.2亿元，对应经调整净利率10.4%，首次实现全年盈利。 执业证书编号：S0930517040002 021-52523692 点评：差异化内容+社区生态及产品创新驱动在线音乐业务增长稳健。23年在线 futz@ebscn.com 音乐实现收入43.5亿元（yoy+17.6%），其中会员订阅收入36.5亿元，同比提 升20.2%；会员订阅量价双升，月平均活跃用户数同比增长8.7%至2.06亿人， 联系人：杨朋沛 付费用户数较23H1增加237万人至4412万人，月平均ARPPU同比 ...

M N 4 Mar 2024 CMB International Global Markets | Equity Research | Company Update Cloud Music (9899 HK) Solid core music business and margin expansion outlook Target Price HK$106.50 Cloud Music announced FY23 financial results: total revenue dropped by 13% (Previous TP HK$99.50) YoY to RMB7.87bn in FY23, in line with our/consensus estimate. 2H23 total Up/Downside 17.7% revenue was down by 16% YoY to RMB3.96bn, mainly due to the adjustment of Current Price HK$90.45 social entertainment business (-42% YoY). ...

交银国际研究 公司更新 互联网 收盘价 目标价 潜在涨幅 2024年3月1日 港元90.45 港元104.00↑ +15.0% 云音乐 (9899 HK) 成本优化好于预期，利润释放趋势不变  2023年下半年利润超预期。2023年下半年云音乐收入39.6亿元（人民币， 个股评级 下同），同比降16%，环比增1%，与我们/市场预期一致。毛利率同/环比 买入 优化13/4个百分点，受益于在线音乐规模效应、版权成本优化以及社交 收入分成比例收窄。经调整净利润为 4.9 亿元，好于我们和市场预期的 3.0亿元，主要因毛利率改善及利息收入高于预期。 1年股价表现 9899 HK  2023下半年业务亮点：1）会员订阅收入同比增23%，得益于会员规模增 30% MSCI中国指数 加（同比+19%，环比净增 470 万），及月人均付费（ARPPU）持续优化 20% 10% （同/环比+3%/2%至7元）。2）品牌/效果广告拓展新客户，激励广告下 0% 半年开始贡献收入增量。3）强化播客/有声书等多元化内容供给，2023年 -10% 长音频收听时长同比增71%。4）尽管社交娱乐收入受业务调整影响同比 -20% 降42% ...

Core Insights - NetEase Cloud Music achieved its first annual profit in 2023, reporting a net profit of 734 million RMB, a significant turnaround from a loss in the previous year [1][7][9] Financial Performance - Total revenue for 2023 was 7.87 billion RMB, a decrease of 12.5% from 8.99 billion RMB in 2022 [2][8] - Gross profit increased by 62.6% to 2.10 billion RMB, with a gross margin rising from 14.4% in 2022 to 26.7% in 2023 [2][7][8] - Adjusted net profit reached 818.5 million RMB, compared to a loss of 114.6 million RMB in 2022 [2][8] User Metrics - Monthly active users for online music services grew to 205.9 million, an increase of 8.7% year-on-year [5][7] - The number of paying users for online music services reached 44.12 million, up 15.3% from 38.27 million in 2022 [6][7] - The average revenue per paying user (ARPPU) for online music services increased from 6.6 RMB to 6.9 RMB [6][7] Revenue Breakdown - Online music service revenue was 4.35 billion RMB, a year-on-year increase of 17.6%, accounting for 55.3% of total revenue [3][6] - Social entertainment services and other revenues totaled 3.52 billion RMB, a decline of 33.6%, making up 44.7% of total revenue [3][6] Cost Management - Operating costs decreased by 25.2%, leading to improved profitability despite a drop in revenue [7][9] - The company effectively controlled R&D and administrative expenses, contributing to the overall profit margin improvement [7][9] Future Growth Strategies - The company aims to enhance its commercial capabilities by leveraging its unique content ecosystem and community engagement to attract more high-value paying users [9][10] - NetEase Cloud Music is expanding its long audio content offerings, including user-generated podcasts and audiobooks, which saw a 70.9% increase in consumption time [10] - The integration of AI technologies in music production and recommendation systems is expected to enhance user experience and content quality [10]

Financial Performance - Total revenue for the year ended December 31, 2023, was RMB 7,866,992 thousand, a decrease of 12.5% compared to RMB 8,992,221 thousand in 2022[2] - Adjusted net profit for 2023 was RMB 818,500 thousand, marking the first annual profit compared to an adjusted net loss of RMB 114,573 thousand in 2022[2] - The company recorded revenue of RMB 7,867.0 million and gross profit of RMB 2,102.7 million, with a significant gross profit increase of RMB 809.6 million due to improved cost control, resulting in a net profit of RMB 734.2 million in 2023 compared to a net loss of RMB 221.5 million in 2022[17] - Profit for the year was RMB 734.2 million in 2023, compared to a loss of RMB 221.5 million in 2022[25] - Adjusted net profit for the year was RMB 818.5 million in 2023, compared to a loss of RMB 114.6 million in 2022[26] User Engagement and Growth - Monthly active users for online music services reached 205.9 million, an increase of 8.7% from 189.4 million in 2022[4] - The number of monthly paying users for online music services rose to 44,120 thousand, up from 38,267.1 thousand in the previous year[5] - Daily active users to monthly active users ratio remains above 30% in 2023, indicating strong user engagement[7] - Long audio content consumption increased significantly by 70.9% in 2023 compared to the previous year, indicating a growing user engagement with audio offerings[12] Revenue Streams - Online music service revenue increased to RMB 4,350,913 thousand in 2023 from RMB 3,698,781 thousand in 2022, reflecting a growth of approximately 17.7%[41] - Subscription revenue grew by 20.2% year-on-year, primarily due to an increase in subscriber numbers and steady improvement in revenue per paying user[6] - Revenue from social entertainment services decreased by 33.6% year-on-year due to operational strategy adjustments[7] - Social entertainment services and others revenue decreased to RMB 3,516,079 thousand in 2023 from RMB 5,293,440 thousand in 2022, a decline of about 33.5%[41] Cost Management - Operating costs decreased by 25.1% from RMB 7,699.1 million in 2022 to RMB 5,764.3 million in 2023, primarily due to a reduction in content service costs[19] - Content service costs decreased to RMB 4,598,724 thousand in 2023 from RMB 6,711,646 thousand in 2022, a reduction of approximately 31.4%[43] - Total operating costs, including sales, marketing, general, administrative, and R&D expenses, amounted to RMB 7,556,358 thousand in 2023, down from RMB 9,516,435 thousand in 2022, representing a decrease of about 20.5%[43] Corporate Governance - The company has adopted and complied with all applicable provisions of the Corporate Governance Code as of December 31, 2023, with some deviations noted[58] - The audit committee, consisting of three independent non-executive directors, has reviewed the unaudited consolidated financial statements for the year ended December 31, 2023[61] - The company has confirmed compliance with the Standard Code for securities transactions by directors and relevant insiders for the year ended December 31, 2023[59] - The board believes that the dual role of the chairman and CEO held by Ding Lei ensures effective and efficient strategic planning[58] Cash and Assets - Cash and cash equivalents increased from RMB 2.9 billion in 2022 to RMB 4.0 billion in 2023, primarily used for operational needs and capital expenditures[27] - Total assets increased to RMB 11,610,551 thousand in 2023 from RMB 10,891,392 thousand in 2022, representing a growth of approximately 6.6%[33] - Total liabilities increased to RMB 3,169,649 thousand in 2023 from RMB 3,071,333 thousand in 2022, an increase of approximately 3.2%[36] Music Content and Innovation - The platform has accumulated approximately 149 million music tracks by the end of 2023, expanding its content library significantly[8] - The company launched the "Cloud Ladder Plan 2023" to optimize revenue support for musicians, enhancing the attractiveness of the revenue settlement mechanism[10] - AI-assisted tools have been introduced to facilitate music creation, including the launch of the NetEase Tianyin platform for music composition and arrangement[10] - The company plans to deepen cooperation with copyright holders and enhance its ability to incubate independent musicians and produce original music[7] Marketing and Promotion - Sales and marketing expenses rose by 19.5% to RMB 758.2 million in 2023, attributed to increased promotional and advertising costs to enhance brand influence and user scale[21] - The company launched several successful self-produced music projects, including popular songs and thematic music initiatives, enhancing its content matrix[11] - The introduction of the "Private DJ" feature enhanced personalized music recommendations, contributing to improved user experience and engagement[14] Financial Ratios and Metrics - The debt-to-asset ratio was 27.3% as of December 31, 2023, down from 28.2% in 2022[28] - Basic earnings per share increased to RMB 3.49 in 2023 from a loss of RMB (1.06) in 2022[50]

Core Viewpoint - NetEase Cloud Music has launched a significant upgrade initiative by introducing the "Arranger Freedom Royalty" feature, which officially includes arrangers in the post-release royalty distribution of songs, aiming to provide fair compensation for their contributions [1] Group 1: Industry Impact - The introduction of the "Arranger Freedom Royalty" feature is expected to have a long-term and profound impact on the Chinese music industry, particularly in the emerging RAP music sector [1] - This initiative recognizes the status of arrangers within the industry, addressing the historical lack of respect and recognition for their contributions [1] Group 2: Copyright Structure - The copyright structure of songs is complex, involving multiple contributors such as lyricists, composers, arrangers, performers, and recording producers, each holding different rights [2][5] - Arrangers possess performance rights, reproduction rights, broadcasting rights, and moral rights, but their rights have not been effectively protected under current copyright laws [5][6] Group 3: Legal Nature of Arranger Rights - The legal definition of "arranger rights" remains ambiguous, with current copyright laws in China lacking specific provisions for the protection of arrangers [5][6] - Judicial practices indicate that arrangements may not qualify as independent works under copyright law due to the lack of originality required for protection [6] Group 4: Emerging Music Genres - In the context of RAP music, the creation of "beats" plays a crucial role, often surpassing traditional arrangements in importance, yet the legal classification of beats remains contentious [7][8] - The production of beats may be viewed as either arrangement or co-composition, highlighting the need for a reevaluation of the legal status of arrangers in modern music [8] Group 5: Conclusion - The move by NetEase Cloud Music to include arrangers in royalty distributions is a groundbreaking step, but further legal recognition and protection for arrangers' contributions are necessary to address the existing gaps in copyright law [9]

【TechWeb】1月30日消息，今日，网易云音乐针对幕后音乐人群体发布“编曲人自由版税”功能，将编曲人群体正式纳入歌曲发布后版税收益分成中。 当下，音乐版税分配体系不健全，编曲人在售卖其作品时，经常被采用最简单的“一口价”方式买断，购买者面对后续的“版税分成”这个问题，则是闭口不谈，编曲制作人的利益在这种情况下往往得不到应有的保障。 针对这一行业痛点，网易云音乐在词曲版税分成功能上进行了全新升级，将“编曲”身份纳入其中。据悉，网易云音乐在2022年上线了面向词曲创作者的词曲版税分成功能。 据介绍，编曲人自由版税为自定义分配收益模式，歌曲的创作者们可以根据作品的贡献度相互协商，自由定义歌曲的分配。在线上填写约定好的比例，系统会自动为上传者、词/曲及编曲作者分配收益。 网易云音乐方面披露的数据显示，该项目自去年12月上线试运行，不到20天，成功完成签约的音乐人已超300位。 ...