iQIYI(US:IQ) GF SECURITIES·2024-08-09 10:01Investment Rating - The investment rating for the company is "Buy" with a current price of $3.15 and a reasonable value of $5.62 per ADS [1][2]. Core Views - The report anticipates that the company's revenue for Q2 2024 will be 7.4 billion RMB, representing a year-over-year decline of 5% and a quarter-over-quarter decline of 7%. The Non-GAAP net profit is expected to be 234 million RMB, down 61% year-over-year and 72% quarter-over-quarter, primarily due to underperformance in content playback and competition from other platforms [2][5]. - Membership revenue is projected to be 4.8 billion RMB, down 8% year-over-year and 6% quarter-over-quarter, while advertising revenue is expected to be 1.4 billion RMB, down 4% year-over-year and 3% quarter-over-quarter [3][5]. - The report highlights that the company has a rich content pipeline for Q3, which is expected to drive performance recovery in subsequent quarters [5][8]. Summary by Sections Q2 2024 Performance Outlook - Expected revenue: 74 billion RMB, YoY -5%, QoQ -7% - Non-GAAP net profit: 2.34 billion RMB, YoY -61%, QoQ -72% - Membership revenue: 48 billion RMB, YoY -8%, QoQ -6% - Advertising revenue: 14 billion RMB, YoY -4%, QoQ -3% [2][3][5]. Q3 Content Pipeline - The company has a strong content reserve, with successful shows like "唐朝诡事录之西行" leading to high viewership. Upcoming diverse content is expected to boost performance in the latter half of the year [5][8]. Profit Forecast and Investment Recommendations - Adjusted revenue forecasts for 2024-2025 are 30.9 billion RMB and 33.2 billion RMB, with corresponding growth rates of -3% and 7%. Membership revenue is expected to reach 19 billion RMB and 20.7 billion RMB in 2024-2025, with growth rates of -7% and 9% [8][10]. - The report anticipates Non-GAAP net profits of 27.66 billion RMB and 35.09 billion RMB for 2024 and 2025, respectively, and maintains a "Buy" rating based on a 14x PE valuation for 2024 [10][12].