iQIYI(US:IQ) Orient Securities·2024-08-01 01:01Investment Rating - The report maintains a "Buy" rating for the company with a target price of $5.32 per ADS, based on a projected P/E ratio of 22X for 2024 [4][10]. Core Insights - The expected revenue for Q2 2024 is $7.4 billion, reflecting a year-over-year decline of 4.9% and a quarter-over-quarter decline of 6.4%, primarily due to underperformance of key series [3]. - The anticipated gross margin for Q2 2024 is 23.5%, down 2.5 percentage points year-over-year and 5.3 percentage points quarter-over-quarter [3]. - Membership service revenue is projected at $4.5 billion for Q2 2024, a decrease of 8.5% year-over-year and 5.6% quarter-over-quarter, attributed to disappointing performance of major projects [3]. - Advertising revenue is expected to be $1.4 billion for Q2 2024, down 4% year-over-year and 3% quarter-over-quarter, mainly due to a decline in brand advertising [3]. - Content distribution revenue is forecasted at $530 million for Q2 2024, reflecting a 4% year-over-year decline and a significant 43% quarter-over-quarter drop [3]. Financial Forecast and Investment Recommendations - The company is expected to see a positive change in membership revenue in Q3 2024 with the release of "Tang Dynasty Strange Events," which has already achieved high viewership [3]. - The GAAP net profit forecast for 2024 is adjusted to $2.435 billion, with subsequent years projected at $3.875 billion for 2025 and $4.975 billion for 2026 [3][9]. - The report indicates that the company’s revenue is expected to grow from $33.125 billion in 2024 to $39.191 billion by 2026, with a compound annual growth rate of approximately 8.4% [7][13].