Investment Rating - The report maintains a "Buy" rating for NetEase Cloud Music, with a target price updated to 312 HKD for 2026, based on a PE of 28X [5][25]. Core Insights - The company's subscription business is experiencing steady growth, significantly reducing promotional and advertising expenses. The financial structure is improving, and the trend towards commercialization is positive [3][11]. - The report highlights that the online music business is growing healthily, while the social entertainment segment is under pressure [21][25]. Financial Summary - Revenue projections for 2023A to 2027E are as follows: 7,867 million RMB in 2023, 7,950 million RMB in 2024, 7,902 million RMB in 2025, 8,649 million RMB in 2026, and 9,375 million RMB in 2027, with a growth rate of -12.5% in 2023 and a projected increase of 9.5% in 2026 [4][25]. - Gross profit is expected to rise from 2,103 million RMB in 2023A to 3,807 million RMB in 2027E, with gross margin improving from 26.7% to 40.6% over the same period [4][25]. - Adjusted net profit is forecasted to be 819 million RMB in 2023, increasing to 2,458 million RMB by 2027, with a significant jump of 107.7% in 2024 [4][25]. Business Performance Overview - In the first half of 2025, the company achieved a revenue of 38.3 billion RMB, a year-on-year decrease of 6.0%. The gross margin was 36.4%, reflecting a year-on-year increase of 1.4 percentage points [25]. - Online music revenue reached 29.7 billion RMB, up 15.9% year-on-year, with subscription revenue growing by 15.2% to 24.7 billion RMB [21][25]. - The social entertainment and other business revenues faced a decline of 43.1% year-on-year, totaling 8.6 billion RMB [21][25]. User Engagement and Community Growth - The report notes a steady increase in monthly active users, with improvements in user engagement metrics such as DAU/MAU ratios and listening duration [25]. - As of June 2025, the platform has over 819,000 registered independent musicians, contributing approximately 4.8 million music tracks [25]. Profitability Forecast and Investment Recommendations - The adjusted net profit for 2025-2027 is projected at 27.58 billion RMB, 22.22 billion RMB, and 24.58 billion RMB, respectively, indicating a growth of 62.3% in 2025, followed by a decline of 19.5% in 2026, and a recovery of 10.6% in 2027 [25]. - The report emphasizes the high entry barriers in the online music service industry and the stable competitive landscape, suggesting significant potential for profitability improvement for NetEase Cloud Music [25].
网易云音乐（09899）：会员订阅业务稳健增长，大幅削减推广及广告费用