3季度预览：会员及品牌广告承压，汇兑收益或带动利润超此前预期

Investment Rating - The report assigns a "Buy" rating for the company, iQIYI (IQ US), with a target price of USD 3.80, indicating a potential upside of 57.7% from the current closing price of USD 2.41 [1][10]. Core Insights - The report anticipates a challenging third quarter for iQIYI, with membership and brand advertising under pressure, but expects foreign exchange gains to boost profits beyond previous expectations. The adjusted net profit forecast for Q3 is raised to RMB 450 million, significantly higher than the Bloomberg consensus of RMB 120 million, reflecting an adjusted net profit margin of 6% [1][2]. - iQIYI's content strategy is evolving to focus on high-quality short dramas and a diverse content offering to attract and retain members. The company has launched new content formats, including "Short Theater" and "Micro Theater," to cater to varied viewing preferences [2]. - The financial outlook for iQIYI shows a projected revenue decline of 10% year-on-year for Q3, with total revenue expected to be RMB 7.241 billion. The advertising revenue is forecasted to drop by 21% year-on-year to RMB 1.325 billion, primarily due to budget cuts in the FMCG sector [1][7]. Financial Summary - For the fiscal year ending December 31, 2023, iQIYI's revenue is projected at RMB 31.873 billion, with a year-on-year growth of 9.9%. However, a decline of 5.6% is expected in 2024, with revenue forecasted at RMB 30.093 billion [3][11]. - The net profit for 2023 is estimated at RMB 2.838 billion, with a significant increase of 94% compared to 2022. The adjusted net profit for 2024 is projected to be RMB 1.881 billion, reflecting a decrease of 33.9% [3][11]. - The report highlights a decrease in the number of paying members, with a forecast of 4.368 million for Q3 2024, down 13% year-on-year [7][11]. Market Position - iQIYI holds a 37% share of the top 20 drama viewership in Q3, showing improvement from earlier in the year. However, it has dropped to third place in variety show viewership, maintaining a stable share compared to the first half of the year [1][5]. - The company is focusing on enhancing its content ecosystem and marketing strategies to improve member engagement and advertising revenue, particularly in light of upcoming e-commerce promotions expected to drive ad revenue growth in Q4 [2][7].