Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The report highlights a significant increase in gross margin for Q1 2024, attributed to a one-time adjustment in copyright costs, increased subscription revenue, and ongoing cost control improvements. The gross margin reached 38%, a year-on-year increase of 15.6 percentage points [5] - The company is expected to continue its profitability growth trajectory, with projected net profits for 2024-2026 being 1.008 billion, 1.281 billion, and 1.444 billion respectively, corresponding to EPS of 4.7, 6.0, and 6.7 [5] - The report emphasizes the company's strategy of enriching its content library through original support, self-produced music, and copyright acquisitions, which has led to successful hits and collaborations with major global music labels [6] - The integration of AI technology in music production and consumption is expected to enhance efficiency and open new growth avenues, potentially lowering content production costs and expanding monetization opportunities [7] Summary by Sections Financial Performance - In Q1 2024, the company achieved total revenue of 2 billion (up 3.6% year-on-year, up 2.2% quarter-on-quarter) and gross profit of 770 million (up 75.6% year-on-year, up 28.3% quarter-on-quarter) [5] - The gross margin for Q1 2024 was reported at 38%, reflecting a substantial improvement due to copyright cost adjustments [5] Content Strategy - The company is focusing on three main paths to enrich its content: supporting original works, producing self-made music, and acquiring copyrights. This strategy has led to notable successes, including award nominations and popular songs [6] - The return of popular Korean music copyrights to the platform has further enhanced its content offerings [6] AI Integration - The company is deepening the application of AI in the music creation process, providing tools that assist users in music production, which is expected to lower barriers to entry and increase user engagement [7]

Financial Performance - Revenue decreased by 12.5% from RMB 8,992,221,000 in 2022 to RMB 7,866,992,000 in 2023[5] - Gross profit increased by 62.6% from RMB 1,293,118,000 in 2022 to RMB 2,102,670,000 in 2023[5] - Adjusted net profit for 2023 was RMB 818,500,000, compared to an adjusted net loss of RMB 114,573,000 in 2022[7] - Net profit for 2023 was RMB 734.2 million, a significant turnaround from a net loss of RMB 221.5 million in 2022[42] - The company achieved an adjusted net profit of RMB 818.5 million in 2023, marking its first annual profit compared to an adjusted net loss of RMB 114.6 million in 2022[12] - The company's revenue decreased by 12.5% from RMB 8,992.2 million in 2022 to RMB 7,867.0 million in 2023[31] - 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 reduced content service costs[33] - Financial income increased significantly from RMB 183.1 million in 2022 to RMB 437.9 million in 2023, attributed to rising interest rates on fixed deposits[40] User Engagement and Growth - Monthly active users for online music services increased to 205.9 million in 2023 from 189.4 million in 2022[9] - Paid subscribers for online music services rose to 44.12 million in 2023 from 38.27 million in 2022[9] - Monthly ARPU (Average Revenue Per User) for online music services increased from RMB 6.6 in 2022 to RMB 6.9 in 2023[9] - The total number of monthly active users reached 205.9 million, representing an 8.7% year-over-year growth, attributed to enhanced user experience and differentiated premium content[13] - The platform's daily active users to monthly active users ratio remained above 30%, indicating strong user engagement[14] - The company’s long audio content consumption increased by 70.9% compared to the previous year, indicating significant growth in user engagement[23] Product and Service Development - The company plans to enhance user engagement through differentiated products and innovative features[11] - The company expanded its music library to approximately 149 million songs by the end of 2023, focusing on diverse music genres to meet user preferences[16] - The company launched the "Cloud Ladder Plan 2023 Phase 1" at the beginning of 2023, optimizing revenue support for musicians with a more attractive settlement mechanism[21] - In September 2023, the company introduced the "Cloud Ladder Plan 2023 Phase 2" and a new "Appreciation" feature, enhancing interaction between musicians and fans, providing new monetization avenues for independent musicians[21] - The company introduced the "Private DJ" feature, combining music recommendations with personalized music introductions, enhancing user experience[25] - The company has developed AI-assisted tools for music creation, making the process more efficient and accessible for musicians[21] - The company has diversified its audio content offerings, including user-generated podcasts and professional content like audiobooks and radio dramas[23] Financial Management and Liquidity - The cash and cash equivalents increased to RMB 4.02 billion as of December 31, 2023, up from RMB 2.91 billion in 2022, indicating improved liquidity[45] - Operating cash inflow before changes in working capital was RMB 487.4 million in 2023, a recovery from an outflow of RMB 239.5 million in 2022[45] - The company reported a net cash increase of RMB 1.11 billion for the year, reflecting strong cash flow management[45] - The company aims to mitigate potential liquidity risks associated with a significant decrease in user numbers for online music and/or social entertainment services[45] Corporate Governance - The company is committed to maintaining compliance with the Hong Kong Stock Exchange regulations through its corporate governance practices[140] - The board includes independent directors with diverse expertise, such as Mr. Gu Xianfeng, a tenured professor at Stony Brook University[136] - The company has established a compensation committee to assist the board in formulating remuneration policies for directors and senior management[85] - The company has implemented a strict securities trading policy for directors and related insiders, confirming compliance during the reporting period[178] - The company has established three committees (audit, remuneration, and nomination) to oversee specific aspects of its affairs, each with a defined written scope of authority[191] Strategic Partnerships and Collaborations - The company successfully collaborated with top artists, achieving outstanding sales performance for albums, including a digital album by Eason Chan that ranked first across all music streaming platforms in China[18] - The company expanded its collaboration with NetEase games, embedding music players into popular game scenarios, enhancing user interaction with music[27] - The company provides services to NetEase Group, including traffic directing services for products and services published on its platform[108] Employee and Shareholder Information - The company employed 1,359 employees as of December 31, 2023, down from 1,540 employees in 2022[75] - The total employee compensation cost for the year was RMB 1,154.0 million, a decrease from RMB 1,203.2 million in the 2022 fiscal year[76] - The company has two active equity incentive plans: the 2016 Plan and the 2022 Restricted Share Unit Plan[151] - The purpose of the equity incentive plans is to link employee interests with shareholder returns and enhance business success[152] Risks and Compliance - The company faces significant uncertainty regarding the sustainability of its current corporate structure and operations due to the Foreign Investment Law[91] - Risks associated with the company's contractual arrangements include potential penalties from the Chinese government if agreements are deemed non-compliant with regulations[90] - The company relies on contractual arrangements with its VIE and its shareholders to conduct business in China, which may not be as effective as direct equity ownership[90]

Investment Rating - The report maintains a "Buy" rating for the company [2][5][6] Core Insights - The company achieved a revenue of 7.87 billion RMB in 2023, a year-over-year decrease of 13%, but the Non-IFRS net profit turned positive at 820 million RMB compared to a loss of 115 million RMB in 2022, indicating a significant recovery [5][6] - The online music segment saw a revenue increase of 18% year-over-year, reaching 4.4 billion RMB, driven by a 15% growth in paid users to 44.12 million, resulting in a paid user rate of 21.4% [5][6] - The company is refocusing on its core online music business, with a major app redesign planned for 2024 to enhance music discovery and community engagement [5][6] Financial Performance and Forecast - The comprehensive gross margin improved to 26.7% in 2023, with a notable increase to 28.7% in the second half of the year, attributed to reduced live streaming revenue sharing and scale effects from online music growth [6][7] - Revenue forecasts for 2024 and 2025 have been adjusted to 8.1 billion RMB and 9 billion RMB respectively, down from previous estimates of 12.9 billion RMB and 14.2 billion RMB, while Non-IFRS net profit forecasts have been raised to 940 million RMB and 1.14 billion RMB for the same years [6][7] - The target price is set at 111 HKD, reflecting a 22% upside potential from the current price [6][7]

Investment Rating - The investment rating for the company is "Outperform the Market" [5][8]. Core Views - The online music business is experiencing healthy growth, with cost control and operational efficiency driving continuous improvement in profitability. The company achieved its first annual profit in 2023, despite a 12.5% year-on-year decrease in total revenue to 7.867 billion yuan, primarily due to a cautious operational strategy that reduced live streaming displays and lowered revenue sharing ratios, leading to a 33.6% decline in social entertainment services revenue to 3.516 billion yuan. Conversely, online music service revenue grew by 17.6% to 4.351 billion yuan, supported by strong commercialization performance and improved cost structure [5][6][10]. Summary by Sections Financial Performance - In 2023, the company reported total revenue of 7.867 billion yuan, a decrease of 12.5% year-on-year. The online music service revenue increased by 17.6% to 4.351 billion yuan, while social entertainment services revenue decreased by 33.6% to 3.516 billion yuan. The company achieved a gross profit of 2.103 billion yuan, up 62.6% year-on-year, with a gross margin increase from 14.4% in 2022 to 26.7% in 2023. The adjusted net profit attributable to the parent company was 819 million yuan, marking the first annual profit [5][6][7][10]. User Metrics - The online music segment saw a significant increase in monthly active users (MAU), growing by 16.5 million to 206 million. The subscription revenue rose by 20.2%, and the average revenue per paying user (ARPPU) increased by 4.2% to 6.9 yuan per month. The paid user rate improved by 1.2 percentage points to 21.4% [6][10]. Future Projections - The company is expected to switch to a price-to-earnings (PE) valuation method, forecasting adjusted net profits of 1.065 billion yuan, 1.234 billion yuan, and 1.511 billion yuan for 2024, 2025, and 2026, respectively. The estimated revenue for 2024 is projected to be 8.460 billion yuan, with a year-on-year growth of 7.5% [6][7][10]. Valuation - Based on comparable companies, the company is assigned a dynamic PE range of 20-23 times for 2024, resulting in a fair value range of 109.22 to 125.61 Hong Kong dollars per share [8][10].

Investment Rating - The investment rating for the company is "Outperform the Market" [5][8] Core Views - The online music business is experiencing healthy growth, with cost control and operational efficiency driving continuous improvement in profitability. The company achieved its first annual profit in 2023, despite a 12.5% year-on-year decrease in total revenue to 7.867 billion yuan, primarily due to a cautious operational strategy that reduced live streaming displays and lowered revenue sharing ratios, leading to a 33.6% decline in social entertainment services revenue to 3.516 billion yuan. Conversely, online music service revenue grew by 17.6% to 4.351 billion yuan, supported by strong commercialization performance and improved cost structure [5][6][10]. Summary by Sections Financial Performance - In 2023, the company reported total revenue of 7.867 billion yuan, a decrease of 12.5% year-on-year. The online music service revenue increased by 17.6% to 4.351 billion yuan, while social entertainment services revenue decreased by 33.6% to 3.516 billion yuan. The company achieved a gross profit of 2.103 billion yuan, up 62.6% year-on-year, with a gross margin increase from 14.4% in 2022 to 26.7% in 2023. The adjusted net profit attributable to the parent company was 819 million yuan, marking the first annual profit [5][6][10]. User Metrics - The online music segment saw a significant increase in monthly active users (MAU), growing by 16.5 million to 206 million. The subscription revenue rose by 20.2%, and the average revenue per paying user (ARPPU) increased by 4.2% to 6.9 yuan per month. The paid user rate improved by 1.2 percentage points to 21.4% [6][10]. Future Projections - The company is expected to switch to a price-to-earnings (PE) valuation method, forecasting adjusted net profits of 1.065 billion yuan, 1.234 billion yuan, and 1.511 billion yuan for 2024, 2025, and 2026, respectively. The estimated revenue for 2024 is projected to be 8.460 billion yuan, with a year-on-year growth of 7.5% [7][10][11]. Valuation - Based on comparable companies, the company is assigned a dynamic PE range of 20-23 times for 2024, resulting in a fair value range of 109.22 to 125.61 Hong Kong dollars per share [8][10].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 133.85, equivalent to RMB 121.47 [5][3]. Core Insights - The company's revenue for H2 2023 is projected at RMB 3.96 billion, reflecting a year-over-year decline of 16% but a slight increase of 1% compared to the previous half [2]. - The gross margin for H2 2023 is expected to be 28.7%, an increase of 13 percentage points year-over-year, primarily due to increased membership revenue diluting copyright costs [2]. - The net profit attributable to the parent company for H2 2023 is projected at RMB 440 million, showing a significant year-over-year increase of 793% [2]. - Online music revenue for H2 2023 is expected to reach RMB 2.32 billion, a year-over-year increase of 22%, driven by enhancements in the music library and copyright agreements with top labels [2]. - Social entertainment revenue for H2 2023 is projected at RMB 1.63 billion, a decline of 42% year-over-year, attributed to a more cautious operational strategy by management [2]. Financial Summary - The company’s projected net profits for 2023, 2024, and 2025 are RMB 734 million, RMB 1.036 billion, and RMB 1.521 billion respectively, reflecting significant growth from previous estimates [3]. - The expected revenue for 2023 is RMB 7.939 billion, with a projected decline of 11.7% year-over-year, followed by a slight recovery in 2024 [3]. - The gross margin is expected to improve from 26.7% in 2023 to 31.6% in 2024 and 35.4% in 2025, indicating a positive trend in profitability [3][9].

Investment Rating - The report maintains a "Buy" rating with an updated target price of HKD 110.64 [3][4]. Core Insights - The company's performance in 2023 exceeded expectations, achieving profitability for the year, driven by accelerated community commercialization and improved profitability [3][4]. - The adjusted net profit for 2023 reached RMB 8.19 billion, marking a significant turnaround from losses in previous years, with a net profit margin of 12.3% [3][4]. - The report highlights the potential for online music subscriptions, cost optimization in content services, and AI-driven community growth as key factors for future profitability [3][4]. Financial Overview - The company reported a total revenue of RMB 39.59 billion in the second half of 2023, a year-on-year decrease of 16.4%, but aligned with expectations due to strong online music performance [3][4]. - The gross profit margin improved to 29%, up 13 percentage points year-on-year, attributed to increased subscription sales and optimized content service costs [3][4]. - The adjusted net profit for the second half of 2023 was RMB 4.87 billion, a year-on-year increase of 375% [3][4]. User Metrics - The company achieved a monthly active user (MAU) count of 206 million in 2023, an increase of 8.7% year-on-year, with a stable daily active user (DAU) to MAU ratio above 30% [3][4]. - The number of registered independent musicians on the platform reached approximately 684,000, with a total music library of 149 million tracks [3][4]. Revenue Breakdown - Online music revenue for the second half of 2023 was RMB 23.30 billion, a year-on-year increase of 21.6%, with subscription revenue contributing RMB 19.40 billion, up 23% [3][4]. - The number of paying users reached 46.49 million, with a payment rate of 22.67% and an average revenue per paying user (ARPPU) of RMB 7, reflecting a 3.7% year-on-year increase [3][4]. - Social entertainment revenue was RMB 15.48 billion, down 42% year-on-year, indicating a need for recovery in this segment [3][4].

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 ...