iQIYI(US:IQ) Orient Securities·2025-05-23 10:23Investment 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]. - The report adjusts the previous profit forecasts due to changes in the competitive landscape for long videos in 2025 [2]. Financial Summary - The company's revenue for 2023 is projected at 31.873 billion CNY, with a year-on-year growth of 9.91%. However, a decline of 8.31% is expected in 2024 [4]. - The GAAP net profit for 2023 is estimated at 1.925 billion CNY, with a significant decline of 1513.58% year-on-year [4]. - The gross margin is expected to decrease from 27.52% in 2023 to 23.78% in 2025, before recovering to 26.32% in 2026 and 26.74% in 2027 [4]. - The company’s operating income is projected to be 2.989 billion CNY in 2023, decreasing to 1.107 billion CNY in 2025, but expected to rise to 2.188 billion CNY by 2027 [4]. Revenue Breakdown - For Q1 2025, the company reported revenue of 7.186 billion CNY, a year-on-year decrease of 9.35%. The membership service revenue was 4.399 billion CNY, down 8.3% year-on-year [10][11]. - Advertising revenue for Q1 2025 was 1.328 billion CNY, reflecting a year-on-year decline of 10.4% [10]. - Content distribution revenue was reported at 629 million CNY for Q1 2025, down 32.3% year-on-year [10]. Market Performance - The stock price as of May 22, 2025, was $1.69, with a 52-week high of $4.92 and a low of $1.50 [5]. - The company has a market capitalization of $16.27 billion [5]. Comparative Valuation - The adjusted average P/E ratio for comparable companies in 2025 is estimated at 31X, indicating a valuation benchmark for the company [12].