iQIYI(US:IQ) GUOTAI HAITONG SECURITIES·2026-02-27 08:02Investment Rating - The report maintains a "Buy" rating for iQIYI (IQ.O) [2] Core Insights - The report highlights that AI is leading a transformation in content production and user experience, with a strategy centered around IP to strengthen user engagement and market leadership [3] - iQIYI's financial performance is improving, with a notable increase in overseas business growth [5][29] Financial Summary - For FY2024, iQIYI's revenue is projected at 29.225 billion RMB, reflecting a year-over-year decrease of 8.3%. The adjusted net profit is expected to be 1.512 billion RMB, down 46.7% from the previous year [5] - The adjusted operating profit for FY2025 is forecasted at 639 million RMB, with an adjusted net profit of 281 million RMB, indicating a significant decline of 81.4% [5] - The adjusted net profit margin is expected to improve gradually from 1.0% in 2025 to 3.3% by 2028 [5] Revenue and Profit Trends - In Q4 FY2025, iQIYI achieved a revenue of 6.79 billion RMB, representing a year-over-year increase of 3% and a quarter-over-quarter increase of 2% [29] - The adjusted net profit for Q4 FY2025 turned positive at 1.1 billion RMB, with an adjusted net profit margin of 1.6%, up 2.5% year-over-year [29] - Membership service revenue in Q4 FY2025 was stable at 4.11 billion RMB, showing a slight year-over-year increase of 0.1% [29] Overseas Business Growth - iQIYI's overseas business demonstrated strong growth potential, with membership revenue increasing by over 30% year-over-year, and a 40% growth rate in the second half of FY2025 [29] Advertising and Other Revenue - Advertising revenue in Q4 FY2025 was 1.35 billion RMB, down 5.7% year-over-year, primarily due to adjustments in advertising strategies by some clients [29] - Content distribution revenue surged by 93.7% year-over-year to 790 million RMB, while other business revenue decreased by 18.3% [29] Future Projections - The report forecasts iQIYI's revenue for FY2026 to be 27.975 billion RMB, with a growth rate of 2.5%, and adjusted net profit expected to reach 595 million RMB [29] - The target price for iQIYI is set at $1.99, based on a 22x PE ratio for FY2026 [29]