Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Insights - The company achieved total revenue of 7.95 billion yuan in 2024, a year-on-year increase of 1.1%, and a net profit of 1.565 billion yuan, representing a year-on-year growth of 113.2% [5] - The gross margin for 2024 reached 33.7%, an increase of 7 percentage points year-on-year, primarily due to cost optimization measures and a one-time adjustment in content licensing fees [5] - The company is expected to continue its profit growth trajectory, with projected net profits for 2025, 2026, and 2027 at 1.812 billion, 2.012 billion, and 2.220 billion yuan respectively [5] - The company is expanding its music library and community ecosystem, with over 770,000 independent musicians and approximately 4.4 million uploaded tracks by June 2024 [6] - The average listening time for long audio content per user increased by 35.8% year-on-year in 2024, indicating a growing user engagement with diverse audio content [6] - Membership subscription revenue reached 4.459 billion yuan in 2024, a year-on-year increase of 22%, driven by enhanced product offerings and user experience [7] Financial Summary and Valuation Metrics - Revenue projections for 2025, 2026, and 2027 are 8.843 billion, 9.735 billion, and 10.609 billion yuan respectively, with year-on-year growth rates of 11.2%, 10.1%, and 9.0% [5] - The projected EPS for 2025, 2026, and 2027 are 8.4, 9.3, and 10.2 yuan, with corresponding P/E ratios of 16.1, 14.5, and 13.2 times [5] - The gross margin is expected to improve to 36.3% in 2025 and further to 38.0% in 2026 [5]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company achieved total revenue of 7.95 billion yuan in 2024, a year-on-year increase of 1.1%, and a net profit of 1.565 billion yuan, representing a year-on-year growth of 113.2% [5] - The gross margin for 2024 reached 33.7%, an increase of 7 percentage points year-on-year, primarily due to cost optimization measures and a one-time adjustment in content licensing fees [5] - The company is expected to continue its profit growth trajectory, with projected net profits for 2025, 2026, and 2027 at 1.812 billion, 2.012 billion, and 2.220 billion yuan respectively [5] Financial Summary and Valuation Metrics - Revenue (million yuan): 2023A: 7,867, 2024A: 7,950, 2025E: 8,843, 2026E: 9,735, 2027E: 10,609 [7] - Net Profit (million yuan): 2023A: 734, 2024A: 1,562, 2025E: 1,812, 2026E: 2,012, 2027E: 2,220 [7] - Gross Margin (%): 2023A: 26.7, 2024A: 33.7, 2025E: 36.3, 2026E: 38.0, 2027E: 38.6 [7] - EPS (diluted, yuan): 2023A: 3.4, 2024A: 7.2, 2025E: 8.4, 2026E: 9.3, 2027E: 10.2 [7] - P/E (times): 2023A: 39.8, 2024A: 18.7, 2025E: 16.1, 2026E: 14.5, 2027E: 13.2 [7] Growth Drivers - The company is expanding its music library and community ecosystem, with over 770,000 independent musicians registered and approximately 4.4 million tracks uploaded by June 2024 [6] - The average listening time for long audio content per user increased by 35.8% year-on-year in 2024, indicating a growing user engagement with diverse audio content [6] - Membership subscription revenue reached 4.459 billion yuan in 2024, a year-on-year increase of 22%, driven by enhanced product offerings and user experience [7]

Summary of Netease Cloud Music Conference Call Company Overview - **Company**: Netease Cloud Music - **Industry**: Online Music Streaming Key Points User Growth and Engagement - In 2024, Netease Cloud Music's monthly active users (MAU) showed steady growth, with core user engagement exceeding 30% [2][4] - The member user base demonstrated high stickiness and activity, with increased average listening duration [2][4] Revenue and Financial Performance - For 2024, Netease Cloud Music reported revenue of RMB 79.5 billion, a year-on-year increase of 1.1% [4][15] - Gross profit reached RMB 26.8 billion, up 27.5% year-on-year, while net profit surged to RMB 15.7 billion, reflecting a 113% increase [4][15] - Online music service revenue grew by 23.1%, with subscription revenue rising to RMB 44.6 billion [4][15] Content and Copyright Expansion - The company actively expanded copyright partnerships, signing agreements with JYP Entertainment and CJNM, and enhancing its Chinese music library [2][6] - By the end of 2024, approximately 773,500 independent musicians were registered on the platform, supported by initiatives like the Stone Plan and Cloud Ladder Plan [2][6] Original Music and Popular Releases - Netease Cloud Music successfully launched several popular original songs in 2024, including the "Roshengmen" series and "5.2 AM" [2][7] - The platform's focus on high-quality music content catered to the preferences of younger audiences [2][7] Audio Content and Product Innovation - The average listening duration for long audio users increased significantly by 35.8% year-on-year [2][10] - The app underwent continuous upgrades, enhancing personalized content recommendations and expanding music community features [11][12] Community Engagement and User Interaction - Netease Cloud Music improved community experiences by introducing features like vinyl record scenarios and music review interactions [12][13] - The company emphasized user-generated content (UGC) to foster community creativity and engagement [12][13] Strategic Focus for Future Growth - Looking ahead, Netease Cloud Music plans to prioritize user experience, particularly among younger demographics, and continue investing in original music production [9][18] - The company aims to enhance its content acquisition strategy through partnerships with both domestic and international copyright holders [19][20] Competitive Landscape and Market Position - Despite competition from free streaming services, Netease Cloud Music believes its quality content differentiates it significantly [21] - The company is focused on enhancing user experience to drive subscription growth and ARPU (Average Revenue Per User) [21] AI Technology Utilization - AI tools are being leveraged to improve music production efficiency and enhance personalized recommendations, significantly impacting content creation and user engagement [17][23] Capital Allocation and Future Investments - Future capital allocation will focus on product experience and content services to ensure the uniqueness and sustainability of proprietary content [24]

Summary of NetEase Cloud Music Annual Phone Conference Company Overview - **Company**: NetEase Cloud Music - **Industry**: Online Music Streaming Key Points and Arguments Industry Developments - The online music industry has seen continuous strengthening and effective improvements in 2024, focusing on enhancing the community ecosystem centered around music [1] - Active users have increased by over 30%, indicating strong community leadership and high user participation [2] User Engagement and Community - The platform has successfully attracted a rapidly growing member group characterized by high activity and listening time, becoming a central force in the community [2] - Unique music community and personalized content recommendations are highlighted as key differentiators [2] - The mobile end-to-end listening time has steadily increased compared to 2023, reflecting enhanced user engagement [2] Content and Copyright Strategy - The company has built a comprehensive music content ecosystem by improving copyright access and supporting independent musicians [2][4] - Strategic partnerships have been established with various artists and record companies to expand the music library, including significant collaborations with well-known musicians [5][17] - The platform has registered approximately 7.35 million independent musicians, marking a milestone in its musician support initiatives [5] Financial Performance - Gross profit reached 33.7% in 2024, up from 26.7% in 2023, driven by increased subscription members and cost optimization [3] - Net profit after adjustment tripled from RMB 8.19 billion in 2023 to RMB 1.7 billion in 2024 [3] - Subscription income surged by 113%, from RMB 7.3 billion in 2023 to RMB 15.7 billion in 2024 [13] Product Innovation and User Experience - Continuous product innovation has been emphasized, with upgrades to personalized recommendation algorithms and product functionalities [2][8] - The introduction of AI technologies has improved content recommendations and user engagement [16][21] - New features such as personalized audio effects and AI singing have been launched to enhance user experience [11][12] Future Strategies - The company aims to focus on long-term sustainable development, prioritizing user experience and cultivating high-quality user groups, particularly among young users [4][13] - Plans to invest in original music and enhance the music community ecology are set for 2025 [4][17] - The company is actively exploring new marketing strategies to attract more users and enhance member growth [18] Market Position and Competition - The management believes that free music apps may meet some user needs but will not significantly impact NetEase Cloud Music's market position due to the quality of content offered [19] - The company is committed to maintaining a competitive edge through unique content and user experience [19] Cost Management - Operating costs have been effectively managed, with a reduction in content service costs contributing to improved profitability [14][15] - Sales and marketing expenses decreased by 19.3%, reflecting a more cost-effective promotion strategy [15] Additional Important Insights - The company has recognized the importance of AI in enhancing user experience and content quality, viewing it as a long-term competitive advantage [21] - The strategic name change to NetEase Cloud Music aims to align better with user recognition and understanding [19] This summary encapsulates the key developments, financial performance, strategic initiatives, and market positioning of NetEase Cloud Music as discussed in the annual phone conference.

Financial Performance - For the year ended December 31, 2024, the company reported revenue of RMB 7,950,146 thousand, representing a 1.1% increase from RMB 7,866,992 thousand in 2023[3] - Gross profit increased by 27.5% to RMB 2,681,512 thousand, up from RMB 2,102,670 thousand in the previous year[3] - Adjusted net profit surged by 107.7% to RMB 1,700,078 thousand, compared to RMB 818,500 thousand in 2023[3] - Online music service revenue increased by 23.1% to RMB 5,354.5 million in 2024, driven by a rise in subscription sales from RMB 3,649.2 million to RMB 4,459.0 million[29] - Operating profit increased significantly to RMB 1,170,847 thousand in 2024 from RMB 330,180 thousand in 2023[52] - Net profit attributable to equity holders for 2024 was RMB 1,561,507 thousand, up from RMB 734,182 thousand in 2023, marking a growth of 113.1%[52] - Basic earnings per share for 2024 was RMB 7.48, compared to RMB 3.49 in 2023, reflecting a 114.3% increase[52] - Total revenue for the year ended December 31, 2024, was RMB 7,950,146,000, a slight increase of 1.06% from RMB 7,866,992,000 in 2023[65] User Engagement and Growth - The company's monthly active users continued to grow, with a daily active users to monthly active users ratio remaining above 30%[8] - Membership subscription revenue increased by 22.2% year-on-year, driven by growth in the membership base[9] - The average listening time for long audio content per user increased by 35.8% year-over-year in 2024, indicating a strong demand for long-form audio[21] - The platform has registered over 773,500 independent musicians, with approximately 4.4 million music tracks uploaded as of December 2024, showcasing significant growth in the independent music ecosystem[17] Content and Innovation - The company plans to deepen collaboration with copyright holders to enhance its content offerings and support independent musicians[12] - Future strategies include increasing user engagement through innovative interactive features and expanding consumption scenarios[14] - The music content library is expected to continue stable growth in both quantity and variety, catering to the interests of younger audiences[12] - The company has expanded its music content supply, focusing on genres like rap, rock, and ACG, and has established strategic partnerships with Modern Sky and other artists, releasing new songs from various popular musicians[15] - The company has implemented personalized content recommendations, improving user engagement and music discovery through enhanced features[23] - The company continues to explore new audio content formats, including podcasts and audiobooks, to diversify its offerings and enhance user engagement[23] Cost Management and Profitability - Gross margin improved from 26.7% in 2023 to 33.7% in 2024, reflecting enhanced profitability[10] - The company aims to optimize profitability through cost management and operational efficiency[14] - Operating costs decreased by 8.6% to RMB 5,268.6 million in 2024, primarily due to a reduction in content service costs[30] - Sales and marketing expenses were reduced by 19.3% to RMB 611.5 million in 2024, reflecting a more cautious promotional strategy[32] - Research and development expenses decreased by 10.2% to RMB 779.7 million in 2024 due to improved utilization of technical resources[34] Financial Position and Assets - The company’s liquidity position showed cash and cash equivalents of RMB 4 billion in 2023 and RMB 3.8 billion in 2024[43] - The debt-to-asset ratio improved to 25.0% in 2024 from 27.3% in 2023[44] - Total assets as of December 31, 2024, amounted to RMB 13,582,249 thousand, an increase from RMB 11,610,551 thousand in 2023[56] - Cash and cash equivalents were RMB 3,795,210 thousand as of December 31, 2024, compared to RMB 4,020,400 thousand in 2023[56] Corporate Governance and Compliance - The company has adopted and complied with all applicable provisions of the Corporate Governance Code for the year ended December 31, 2024[89] - The audit committee reviewed the unaudited consolidated financial statements for the year ended December 31, 2024, and discussed accounting policies and internal controls with the auditors[93] - The company is focused on maintaining compliance with the Listing Rules and the Standard Code for securities trading by directors[106] Miscellaneous - The company did not declare or pay any dividends for the years ended December 31, 2024, and 2023[80] - There were no significant events affecting the company since the end of the reporting period[87] - The company raised approximately HKD 3,160 million (equivalent to approximately RMB 2,584 million) from its global offering completed on December 2, 2021, with no funds utilized as of December 31, 2024[100]

Investment Rating - The report gives a "Recommend" rating for NetEase Cloud Music (9899.HK) [19] Core Views - NetEase Cloud Music focuses on increasing paid users and improving ARPPU, with future growth driven by both factors [2] - The company is expected to achieve net profits of 1.3/1.5/1.7 billion yuan in 2024/2025/2026, with corresponding P/E ratios of 18/16/14X [2] Business Model and Revenue - Revenue mainly comes from online music services and social entertainment services, accounting for 63% and 37% of total revenue in 24H1 respectively [2] - Online music subscription revenue accounts for 84% of online music service revenue, with advertising and digital albums making up the remaining 16% [2] - Social entertainment service revenue is driven by MAU, payment rate, and ARPPU, with paid users increasing from 5800 in 2018 to 1.6 million in 2023 [10] Financial Performance - NetEase Cloud Music achieved its first annual profit in 2023, with a net profit of 700 million yuan and a net profit margin of 9% [2] - In 24H1, the company's net profit reached 800 million yuan, with a net profit margin of 20% [2] - Gross margin improved significantly from -4% in 21Q1 to 33% in 24Q3 [2] Industry Overview - The global music market is recovering, driven by the growth of streaming services, with China having the highest growth rate in 2023 [81][82] - The global streaming music market is relatively fragmented, with Spotify leading with a 32.1% market share in 2023 [103] - In China, the online music market has formed a "one super, one strong" competitive landscape, with Tencent Music and NetEase Cloud Music as the main players [105] Competitive Advantages - NetEase Cloud Music is one of the largest online incubators for independent musicians in China, with registered independent musicians increasing from 400,000 in 2021 to 684,000 in 2023 [121] - The platform has a strong community attribute, with over 48% of listeners browsing the comment section as of June 2021 [113] - The platform's user base is young, with 72% of users being post-00s in 2023 [112] Future Outlook - The company's strategy focuses on increasing paid users and improving ARPPU, with expected net profits of 1.3/1.5/1.7 billion yuan in 2024/2025/2026 [2] - Gross margin is expected to continue to improve, reaching 34%/36%/37% in 2024/2025/2026, with net profit margins of 16%/17%/18% [142]

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Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company has shown significant improvement in profitability, with a 165.4% year-over-year increase in adjusted net profit for H1 2024, driven by substantial growth in subscription revenue from online music services [3][5]. - The company has successfully increased its paid user base, leading to a 26.6% year-over-year growth in online music revenue, with subscription sales accounting for 83.8% of this revenue [4][5]. - The company has adopted a cautious approach to its social entertainment business, resulting in a 19.9% year-over-year decline in revenue from this segment, focusing instead on enhancing the core music user experience [5]. Financial Performance Summary - For H1 2024, the company reported revenues of 4.07 billion RMB, a 4.1% increase year-over-year, with operating costs decreasing by 10.14% to 2.65 billion RMB [3]. - The adjusted net profit for H1 2024 reached 0.88 billion RMB, reflecting a significant improvement in profitability metrics [3]. - The gross margin improved to 35.0%, up 10.3 percentage points year-over-year, attributed to a reduction in content service costs [3]. User Growth and Market Position - The company has maintained a daily active user (DAU) to monthly active user (MAU) ratio above 30%, indicating strong user engagement [4]. - As of H1 2024, the platform has over 732,000 registered independent musicians, contributing to a diverse music library of approximately 3.6 million tracks [4]. Revenue Forecast and Valuation - Revenue projections for 2024-2026 are estimated at 8.29 billion RMB, 8.89 billion RMB, and 9.43 billion RMB, respectively, with adjusted net profits expected to reach 1.30 billion RMB, 1.48 billion RMB, and 1.66 billion RMB [6][7]. - The report anticipates a gradual release of operating leverage, enhancing profitability over the long term [5].

中期 報告 INTERIM REPORT 2024 中期報告 目 錄 | 公司資料 | 2 | | --- | --- | | 財務及業務摘要 | 4 | | 管理層討論與分析 | 5 | | 其他資料 | 15 | | 中期財務資料的審閱報告 | 25 | | 釋義 | 55 | 雲音樂 2024 年中期報告 2 公司資料 董事會 執行董事 丁磊先生 （主席兼首席執行官） 李勇先生 非執行董事 李日強先生 鄭德偉先生 （於2024年2月15日辭任非執行董事） 王冉先生 （於2024年5月23日辭任非執行董事） 獨立非執行董事 盧英傑先生 顧險峰先生 許忠先生 審計委員會 盧英傑先生 （主席） 顧險峰先生 許忠先生 薪酬委員會 許忠先生 （主席） 顧險峰先生 盧英傑先生 提名委員會 顧險峰先生 （主席） 盧英傑先生 許忠先生 公司秘書 黃慧兒女士 授權代表 李勇先生 黃慧兒女士 核數師 羅兵咸永道會計師事務所 執業會計師及註冊公眾利益實體核數師 香港中環 太子大廈22樓 註冊辦事處 P.O. Box 309, Ugland House Grand Cayman KY1-1104 Cayman Islands ...