iQIYI(US:IQ) Minsheng Securities·2024-08-23 12:40Investment Rating - The report assigns a cautious recommendation rating for the company, indicating a potential upside of 5% to 15% relative to the benchmark index over the next 12 months [4]. Core Insights - The company reported a year-over-year revenue growth of 4.6% in Q2 2024, with total revenue reaching 7.439 billion yuan. The net profit attributable to shareholders was 0.69 billion yuan, reflecting a non-GAAP net profit margin of 3.3% [2][3]. - Membership growth is highlighted as a key focus area, with expectations that Q3 may represent a temporary low point for profitability. The company aims to maximize membership revenue through enhanced content offerings [2][3]. - The report notes that advertising revenue has declined, primarily due to a decrease in brand advertising performance, although this was partially offset by an increase in performance-based advertising revenue [2]. Summary by Sections Financial Performance - In Q2 2024, the company achieved a total revenue of 7.439 billion yuan, with a year-over-year growth of 4.6%. The operating profit was 0.9 billion yuan, resulting in an operating profit margin of 6.7% [2]. - Membership revenue grew by 2% year-over-year, while advertising revenue saw a decline of 2.3% year-over-year and 1.4% quarter-over-quarter [2]. Content Strategy - The company plans to enhance its content strategy by focusing on female-friendly genres, with several new series in the pipeline, including "Four Corners" and "Dream of the Great Return" [2]. - The report emphasizes the importance of content quality and its impact on membership growth, suggesting that improved content offerings could lead to better financial performance in the future [2]. Market Outlook - The company is expected to face short-term challenges in its membership business, particularly in Q3, but there is optimism regarding the recovery of operational metrics as new content is released [2][3]. - Analysts suggest that the company should be closely monitored for the performance of upcoming content releases, which could significantly influence future revenue and profitability [2].