Youdao(US:DAO) GF SECURITIES·2024-06-13 10:01Investment Rating - The investment rating for the company is "Buy" with a current price of $3.69 and a fair value of $7.13 [1][2]. Core Insights - The company achieved its first consecutive profitable quarters, with Q1 2024 revenue of 1.392 billion RMB, a year-on-year increase of 19.65%, and a net profit of 12 million RMB, marking a turnaround from losses [2][12]. - Digital content services showed steady growth, while online marketing services experienced significant momentum, with a 125.89% year-on-year revenue increase in Q1 2024 [2][12]. - The company has improved cost control, with a sales expense ratio of 32.7%, down 15.9 percentage points year-on-year [2][12]. - AI technology has empowered all business lines, with AI-driven subscription services achieving over 140% year-on-year sales growth in Q1 2024 [2][12]. Financial Performance Summary - For 2024-2026, the company is projected to generate revenues of 6.058 billion RMB, 6.984 billion RMB, and 7.890 billion RMB, respectively, with net profits of -140 million RMB, 86 million RMB, and 199 million RMB [2][15]. - The learning services segment is expected to generate revenues of 3.463 billion RMB, 3.913 billion RMB, and 4.422 billion RMB from 2024 to 2026 [12][15]. - The smart devices segment is projected to achieve revenues of 864 million RMB, 907 million RMB, and 979 million RMB during the same period [12][15]. - The online marketing services are anticipated to generate revenues of 1.731 billion RMB, 2.164 billion RMB, and 2.489 billion RMB from 2024 to 2026 [12][15].