iQIYI(US:IQ) Orient Securities·2025-05-23 08:15Investment Rating - The report maintains a "Buy" rating for the company with a target price of $1.75 per ADS [2][5]. Core Views - The company is expected to increase its focus on short dramas, which is anticipated to drive a rebound in ROI in the long term. The GAAP net profits for 2025-2027 are projected to be 396 million, 1.647 billion, and 2.347 billion CNY respectively [2][4]. - The report indicates a downward adjustment in profit forecasts due to changes in the competitive landscape for long videos in 2025 [2]. Financial Summary - Revenue Forecasts: The company's revenue is projected to decline from 31.873 billion CNY in 2023 to 29.103 billion CNY in 2025, with a slight recovery to 30.578 billion CNY in 2026 and 31.343 billion CNY in 2027 [4][14]. - Net Profit: The GAAP net profit is expected to drop significantly to 396 million CNY in 2025, followed by a recovery to 1.647 billion CNY in 2026 and 2.347 billion CNY in 2027 [4][14]. - Earnings Per Share (EPS): The EPS is forecasted to decrease to 0.41 CNY in 2025, then rise to 1.71 CNY in 2026 and 2.44 CNY in 2027 [4][14]. - Profit Margins: The gross margin is expected to decline from 27.52% in 2023 to 23.78% in 2025, before recovering to 26.32% in 2026 and 26.74% in 2027 [4][14]. - Valuation Ratios: The P/E ratio is projected to be 30 in 2025, decreasing to 7 in 2026 and 5 in 2027, indicating a potential undervaluation in the coming years [4][14].