Investment Rating - The report maintains a "Buy" rating for NetEase Cloud Music (09899.HK) with a target price of HKD 167.81, equivalent to RMB 154.80 [4][9]. Core Views - The company is expected to benefit from the continuous optimization of its music library and the strengthening of its online music operations, leading to an increase in monthly active users (MAU) [4]. - The introduction of well-known Korean music labels and the promotion of original music are anticipated to enhance online music revenue, with projected net profits for 2024, 2025, and 2026 being RMB 1.56 billion, RMB 1.72 billion, and RMB 2.18 billion respectively [4]. - The report highlights a strategic shift towards core music business, with a reduction in social entertainment revenue due to a more cautious operational approach [4]. Financial Summary - Revenue for 2022 was RMB 8.995 billion, with a projected decline to RMB 7.867 billion in 2023, followed by a slight recovery to RMB 8.015 billion in 2024 [6][12]. - The company reported a net profit of RMB 734 million in 2023, with expectations of RMB 1.562 billion in 2024, reflecting a significant year-on-year growth of 112.7% [6][12]. - Gross margin is expected to improve from 26.7% in 2023 to 33.7% in 2024, driven by increased online music revenue and cost optimization measures [6][12]. Revenue Breakdown - Online music revenue is projected to reach RMB 28 billion in 2024, representing a year-on-year growth of 20%, primarily due to enhanced membership services and content offerings [9]. - Social entertainment revenue is expected to decline to RMB 11 billion in 2024, down 33% year-on-year, as the company focuses on its core music business [9]. Valuation Metrics - The report uses a comparable company analysis, suggesting an average adjusted P/E ratio of 20 times for 2025, which supports the target price of HKD 167.81 [4][10]. - The projected earnings per share (EPS) for 2024 is RMB 7.21, increasing to RMB 10.06 by 2026 [6][12].
网易云音乐：24H2点评：曲库持续优化，在线音乐经营杠杆加强-20250306