iQIYI(US:IQ)2024-07-23 01:01Investment Rating - The investment rating for the company is "Buy" with a target price of $4.20, indicating a potential upside of 20.0% from the current price of $3.50 [1][13]. Core Insights - The company has revised its revenue and profit expectations downward for Q2 2024, with revenue now expected to be RMB 7.4 billion, a 4% decrease from previous estimates, and a year-on-year decline of 5% [1][2]. - The adjusted net profit forecast for Q2 2024 has been lowered to RMB 240 million, which is below Bloomberg's consensus estimate of RMB 480 million, reflecting a net profit margin of 3%, down 5 percentage points year-on-year [1][2]. - The company anticipates that its membership numbers may hit a low point in Q2 2024 but expects a recovery in Q3 due to the performance of new content [2][11]. Revenue and Profit Forecast - The revenue forecast for 2024 has been adjusted down by 3% to RMB 31.6 billion, with a projected compound annual growth rate (CAGR) of 13% for net profit from 2023 to 2025 [2][3]. - The adjusted net profit for 2024 is now estimated at RMB 2.9 billion, reflecting a 16% decrease from previous estimates [2][3]. Membership and Advertising Revenue - Membership revenue for Q2 2024 is expected to decline by 5% to RMB 4.5 billion, a 9% year-on-year decrease, primarily due to underperformance in key series [2][11]. - Advertising revenue is projected to decrease by 2% to RMB 1.5 billion in Q2 2024, with brand advertising under pressure due to lower-than-expected performance of key series and a reduction in the number of self-produced variety shows [2][11]. Financial Overview - The company reported a revenue of RMB 28.998 billion in 2022, with a projected revenue of RMB 31.873 billion in 2023, and a slight decline to RMB 31.616 billion in 2024 [3][14]. - The net profit for 2022 was RMB 1.284 billion, with projections of RMB 2.838 billion in 2023 and RMB 2.941 billion in 2024 [3][14]. Market Position - The company's share of the top 20 series viewership has decreased to 20%, trailing behind competitors like Tencent Video and Youku [2][8]. - The company is expected to benefit from the performance of new series in the second half of 2024, which may help stabilize membership revenue [2][11].