iQIYI(US:IQ) Minsheng Securities·2024-11-25 07:04Investment Rating - The investment rating for iQIYI (IQ.O) is currently "Neutral" with a target price based on expected performance relative to benchmark indices [1]. Core Views - iQIYI's Q3 2024 performance showed a revenue decline of 10% year-over-year, totaling 7.25 billion yuan, with membership services and advertising revenue under pressure due to content performance [1]. - The company is focusing on micro-dramas as a new content supply to enhance user engagement and monetization opportunities [1]. - iQIYI has introduced a family membership package to optimize its membership service system, aiming to attract more users [1]. Summary by Sections Financial Performance - Q3 2024 revenue was 7.25 billion yuan, down 10% year-over-year; operating profit was 240 million yuan, with a Non-GAAP operating profit of 370 million yuan; net profit attributable to shareholders was 230 million yuan, with a Non-GAAP net profit of 480 million yuan [1]. - Membership service revenue was 4.4 billion yuan, down 13% year-over-year, primarily affected by content performance [1]. - Online advertising revenue was 1.3 billion yuan, down 20% year-over-year, mainly due to a decline in brand advertising [1]. - Content distribution revenue increased by 52% year-over-year to 810 million yuan [1]. - Operating costs were 5.6 billion yuan, down 3% year-over-year, with content costs at 4 billion yuan, down 5% year-over-year [1]. - The company achieved a gross margin of 22%, down 5.1 percentage points year-over-year [1]. Strategic Initiatives - iQIYI is increasing its investment in micro-dramas, which are seen as a valuable supplement to long-form video content, with plans to offer all micro-dramas for free to members [1]. - The introduction of the "Golden VIP Family Card" package aims to enhance user experience and attract more subscribers [1]. Future Outlook - The company is expected to face short-term challenges in its membership business, but there are upcoming series such as "Winter Solstice" and "I'm a Criminal Police Officer" that may improve performance [1].