Investment Rating - The report maintains a "Buy" rating for Yuewen Group with a target price of HKD 41.17, revised from HKD 46.82 [1][6][9] Core Views - Yuewen Group's revenue in H1 2024 increased by 27.7% YoY to RMB 4.19 billion, with net profit attributable to shareholders growing by 33.9% YoY to RMB 500 million [1] - The strong performance is driven by the high growth of IP operation business, supported by multiple hit TV dramas and films [1] - The company is expected to achieve revenues of RMB 7.5 billion, RMB 7.91 billion, and RMB 8.21 billion in 2024, 2025, and 2026, respectively [1] Online Business - Online business revenue in H1 2024 decreased by 2.2% YoY to RMB 1.94 billion, mainly due to a shift towards ROI-focused paid reading models, which reduced ad revenue from free reading channels [2] - MAU on Tencent product channels dropped by 33.5% YoY to 70 million, with revenue declining by 26.2% YoY to RMB 130 million [2] - Third-party platform revenue grew by 18.2% YoY to RMB 120 million, benefiting from increased cooperation with third-party distributors [2] - MPU (Monthly Paying Users) increased by 1.1% QoQ to 8.8 million, indicating improved user stickiness and potential for future growth [2] IP Operation Business - IP operation business revenue surged by 75.7% YoY to RMB 2.2 billion in H1 2024, driven by hit TV dramas such as "Hot and Spicy," "The Legend of Shen Li," and "The Story of Rose" [3] - The company has a rich pipeline of IP projects, with "The Great Sage" and "Silent Reading" set to launch in H2 2024 [3] - IP licensing and derivative businesses also saw significant growth, with IP card GMV reaching RMB 100 million in H1 2024 [3] AI Technology and Overseas Expansion - Yuewen Group is leveraging AI technology, particularly its "Miaobi" model, to enhance content creation efficiency and support the overseas expansion of its WebNovel platform [4] - In H1 2024, AI-translated works accounted for approximately 40% of the top 100 bestsellers on WebNovel [4] - The company is exploring further integration of AI with IP content creation, which could drive future revenue growth [4] Financial Forecasts - Revenue is projected to grow at a CAGR of 4.6% from 2024 to 2026, reaching RMB 8.21 billion by 2026 [5] - Non-GAAP net profit is expected to increase from RMB 1.38 billion in 2024 to RMB 1.63 billion in 2026 [1] - EPS is forecasted to grow from RMB 1.06 in 2024 to RMB 1.28 in 2026 [5] Valuation - The SOTP valuation method assigns a target price of HKD 41.17, with online business valued at RMB 17.74 billion (HKD 18.85 per share) and IP operation business valued at RMB 21.01 billion (HKD 22.32 per share) [9][11][13] - The online business is valued at 4.6x 2024E PS, in line with the average PS of other online entertainment platforms [11] - The IP operation business is valued at 19.2x 2024E PE, consistent with the average PE of other IP content producers [13]
阅文集团：IP业务高增，AIGC赋能