研究报告全文：23Aug2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateiQIYIIQUSBUYMaintainPrioritizingonlong-termsubsvalueTargetPriceUS86PreviousTPUS86UpDownside755DespitesoftseasonandcontentdelayIQstilldeliveredsolid2Q23resultswithCurrentPriceUS49in-linetoplineandupbeatmarginMarketconcernmaylieonitslowsubsretentionandlimitedvisibilityon2H23EsubsnetaddsbutwebelieveitsrichChinaEntertainmentSectorhigh-qualityandexclusivecontentwouldsupportlong-termsubsvalueWeforecast3Q23Erev8YoYinwhichsubsads2037YoYwithadjOPSophieHUANGatRMB815mnARMwouldseehealthygrowthin2H23EWeexpectrecovering85239000889adsbudgetfrommultipleverticalswithrichercontentSuggesttoeyeonsophiehuangcmbicomhkupcomingstrongpipelineincludingTheDemonHuntersRomance无忧渡StoryofKunningPalace宁安如梦etcWeliftedourearningsforecastby5-EasonXU10inFY23-25EwhileTPkeptunchangedatUS86implying23x17xeasonxucmbicomhkFY2324EPEStockDataSolid2Q23withmarginsurpriseIQdeliveredsolid2Q23resultswithin-MktCapUSmn5413linerev17YoYandupbeatadjNPatRMB595mn3242aheadAvg3mthstoUSmn6148ofourestimateconsensusMembershipservicesshowedresilientgrowthat52wHighLowUS799165TotalIssuedSharesmn522154YoYdrivenbyrisingpayingsubs133YoYandstableARMSourceBloomberg19YoYAdssequentiallyrecoveredat15YoYgrowthmainlyonstrongperformanceadsaswellasbrandadsamidthe618FestivalAdjShareholdingStructureNPMwas76aboveourestimateconsensus5859duetoGoldmanSachs809stringentcostcontrolpartiallyoffsetbyhigherSMexpensefornewBlackRock379VanguardGroup332launchesSourceBloombergPrioritizingonLTgrowthsustainabilityMgmtwillfocusmoreonlong-SharePerformancetermvalueofsubsratherthansolelyquarterlysubsscaleItenhanceduserAbsoluteRelativeexperiencewithmorebenefitstostrengthensubsstickinessandretention1-mth3879Weforecast3Q23Esubsrev20YoYinwhichARMwouldachieve3-mth48-17sequentialgrowthSubsnetaddsmightbevolatileintheshortrunbutlong-6-mth-282-388SourceBloombergtermmomentumwouldbeboostedbyitsrichhigh-qualityexclusivecontentInsummerseriesIQsMysteriousLotusCasebook莲花楼gained12-mthPricePerformancetractionswithviewershipmarketshareof20-30Top2behindofUSIQUSCCMPrebasedTencentvideosLostYouForever长相思Lookinginto2H23Ewethink90IQsstrongpipelinewouldbringfurtherupsideincludingTheDemon80HuntersRomance无忧渡StoryofKunningPalace宁安如梦etc7060Expectingadsaccelerationin3Q23EAdswouldaccelerateto37YoY50in3Q23Evs25YoYin2Q23forstrongcontentinsummermore40varietyshowsandrisingbudgetfrommultipleverticalsegfood3020beverageBysegmentperformance-basedadswouldgrowfasterthan10brandadsMgmtispositiveonadsdemandfromecommercelivestreaming00ecommercetravelandlifestyleverticalsin2H23EAug-22Nov-22Feb-23May-23MaintainBUYWeliftedFY23-25Eearningsforecastby5-10withSourceBloombergunchangedDCF-basedTPatUS86higherearningstooffsetcurrencychangeinlinewithNetflixandMangosmultipleKeycatalysts1keyAuditorPwCdramastobelaunchedin2H23Eand2decentadsrecoveryEarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn3055428998323823458135952YoYgrowth29511176840AdjnetincomeRMBmn45491266252334423908AdjEPSRMB5615273641YoYgrowthNANA993364135ConsensusEPSRMBNANA213037PExNA2331319785PSx1112101009Yield0000000000SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOANDhttpwwwcmbicomhk23Aug2023Figure12Q23financialreviewRMBmn3Q214Q211Q222Q223Q224Q221Q232Q23QoQYoYConsensusDiffCMBIDiffRevenue75897389727766577471759383497802-651727783077760Operatingprofit1368738993126310784859610-28938535943620-2Netprofit17301776169214396304618365-409NA3321029225Adjnetprofit1400100216278187856940595-36765994632844833EPSRMB175125020009022098097061-37657370434204632MarginGrossmargin74119180212236289287260261260Operatingmargin-1801000131941103103787680Adjnetmargin-184-136221225113113765958GrowthRevenueYoY56-09-87-125-1628147172169168RevenueQoQ-03-26-15-8512216100-65-68-69OperatingprofitNANANANANANANANANANAAdjnetprofitNANANANANANANANANANASourceCompanydataBloombergCMBIGMestimatesFigure22Q23revenuebreakdown3Q214Q211Q222Q223Q224Q221Q232Q23QoQYoYRevenueRMBmn75897389727766577471759383497802-65172MembershipServices42884121447142854211474455474947-108154OnlineAdvertising1660166513371194124715531404149565253ContentDistribution627762626479730635727553-239155Others10138428426981284661670807204156SourceCompanydataCMBIGMestimatesFigure3Keypremiumdramastobelaunchedin2H23ESourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE223Aug2023Figure4QuarterlysubsestimatesFigure5Yearlysubsrevestimates140152500018mnRMBmn16120145200001410012141500080106081351000064013500042020125001Q212Q213Q214Q211Q222Q223Q224Q221Q232Q23FY21FY22FY23EFY24EFY25ESubsavgARMRMBMembershipservicesrevYoYSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure6iQIYIskeydramaseriespipelineintherestofFY23ETitlesChinesetitlesGenreStarringTheDemonHuntersRomance无忧渡Romance任嘉伦宋祖儿FoxSpiritMarchmaker狐妖小红娘Costume杨幂龚俊郭晓婷StoryofKunningPalace宁安如梦Costume白鹿张凌赫王星越AJourneytoLove一念关山Costume刘诗诗刘宇宁MyJourneytoYou云之羽Costume虞书欣张凌赫丞磊Backforyou漫影寻踪Romance杨颖王安宇匡牧野Bionic仿生人间Sci-fi宋威龙文淇SpecialLady陌上人如玉Romance肖燕翟子路盛英豪HuaXiJi花溪记Romance邢菲徐开骋徐方舟Risingwiththewind我要逆风去Romance龚俊钟楚曦吴宣仪TheComicBang开画少女漫Romance沈月王敬轩赵弈钦Iamcriminalpolice我是刑警Crime于和伟李春嫒刘泊潇Meetmeinyoursound幻乐森林Costume许佳琪魏哲鸣吴希泽GoldenTrio老家伙Life张国立王刚张铁林HelloLife无所畏惧Life热依扎王阳啜妮TheMutations天启异闻录Costume路阳乔磊范川NewYorkMission2唐人街探案2Crime邱泽尚语贤张钧甯TigerCrane虎鹤妖师录Costume蒋龙张凌赫王玉雯ChinesePaladin4仙剑奇侠传4Costume鞠婧祎陈哲远茅子俊SourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE323Aug2023Figure7iQIYIsquarterlyadsrevestimatesFigure8iQIYIsyearlyadsrevestimates800020250050RMBmnRMBmn40700015200010306000520500015000104000-5010003000-10-10-152000500-20-20-301000-250-400-301Q213Q211Q223Q221Q233Q22EFY21FY22FY23EFY24EFY25EAdsrevYoYgrowthAdvertisingrevYoYgrowthSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure9QuarterlymarginestimatesFigure10Yearlymarginestimates4040303020201010001Q212Q213Q214Q211Q222Q223Q224Q221Q232Q233Q23EFY20FY21FY22FY23EFY24EFY25E-10-10-20-20-30-30GPMnon-GAAPOPMnon-GAAPNPMGPMnon-GAAPOPMnon-GAAPNPMSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesFigure11DCFValuationDCFvaluationRMBmn2023E2024E2025E2026E2027E2028E2029E2030E2031E2032EEBIT350546305300597472578189902898871067811212Tax100275512512674806928104510681121DA13211134721393914530150121546215923163941721318074Workingcapital9690136001410614581151131557315991164961732018186CAPEX90793410171049109611101109112111771224FCF6019329336034362538661626923761983268754FCFGrowth-459212314121095TerminalValue93771PVFCFTerminalValue60192924284130543349340233943317321835191AssumptionsWACC126Taxrate150Riskfreerate36Beta110Marketriskreturn118Terminalgrowthrate30Debtvalue0WACC8601112131415EquityValue159685796862PV66709209987817063minusNetcash8155Growth2510390837165minusMinorityInterest03010793867366EquityValue585533511196897567Sharesmn94740117100927769TargetPriceUSbasedonDCF8645123105968071SourceCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE423Aug2023Figure12CMBIGMestimatesvsconsensusCMBIGMConsensusDiffRMBmnDec-YEFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue32382345813595232397348133715700-07-32GrossProfit850099321080488531033011577-40-39-67OperatingProfit253935994227295440804790-141-118-118Adjnetprofit2523344239082311334441079229-48EPSRMB26636240821230037525520790GrossMargin262287301273297312-11ppts-10ppts-11pptsOperatingMargin7810411891117129-13ppts-13ppts-11pptsNetMargin78100109719611107ppts03ppts-02pptsSourceCMBIGMestimatesBloombergFigure13EarningsrevisionNewOldDiffRMBmnDec-YEFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue32382345813595232387346043597800-01-01GrossProfit85009932108048271971010577282321OperatingProfit253935994227230933733995996758Adjnetprofit2523344239082293323937121006353EPSRMB2663624082423403881006353GrossMargin26228730125528129407ppts07ppts07pptsOperatingMargin78104118719711107ppts07ppts07pptsNetMargin78100109719410307ppts06ppts06pptsSourceCompanydataCMBIGMestimatesFigure14ValuationcompsCompanyTickerMktcapCurrencyPriceCMBICMBIPEPSFY23-25EPSUSDmnRaitingTPFY23EFY24EFY25EFY23EFY24EFY25ECAGRiQIYIIQUS4973USD5BUY86131978510100924InternetgiantsTencent700HK387836HKD318BUY45819016114246413715AlibabaBABAUS225271USD89BUY15798928417161412DisneyDISUS157141USD86NANA22017215018171625NetflixNFLXUS180932USD408NANA33626020854474327Average16914212533302720VASSubscribersKuaishou1024HK33493HKD61BUY97511204121211916106Mango300413CH7438CNY29NANA22819316834302817BilibiliBILIUS6121USD15BUY27NANA498191614NATMETMEUS11155USD7BUY91391321183030276HuyaHUYAUS520USD2BUY6NA445118050505NADouyuDOYUUS327USD1NANA36531724404040436MomoMOMOUS1747USD9HOLD145855521010096YYYYUS2244USD32BUY4615813411010090921ChinaLiterature772HK4051HKD31NANA19817315438343214Average15614812019171613FilmTVIPLinmonMedia9857HK414HKD9NANA7753NA1613NANAStrawbearentertainment2125HK63HKD1BUY4NANANANANANANAAverage7753NA1613NANAAdvertisingBaiduBIDUUS43672USD125BUY1951301181032321196WeiboWBUS3037USD13BUY2758524716151410FacebookMETAUS745959USD290NANA21416714856504522SnapchatSNAPUS15189USD9NANANA986434343026NAAverage1341129924222612Average16213511623212014SourceBloombergCMBIGMestimatesKeyInvestmentRisksKeyinvestmentrisksmayderivefrom1keycontentdelay2regulatoryuncertainty3slower-than-expectedadsrecoveryformacrouncertaintyand4competitionfromSFVPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE523Aug2023FinancialSummaryIncomestatementCashflowsummaryYE31DecRMBmnFY21AFY22AFY23EFY24EFY25EYE31DecRMBmnFY21AFY22AFY23EFY24EFY25ERevenue3055428998323823458135952Netincome6170136161724742902Membershipservices1671417711206692229323373DA1676616475132111347213939Onlineadvertising70675332625766156770ChangeinWC175861834696901360014106servicesContentdistribution28562470239624922566Others97719379069681006Others39183485306131823243OperatingCF601371604333143740COGS2751322319238822465025148Grossprofit304166788500993210804Capex4018419079341017Purchaseoflong-term386582---investmentsSM47253467388741814361Others2049525---AdminExpInvestingCF12622669079341017RD27951899207421532216Operatingprofit44791312253935994227Equityraised268----ChangeofDebts2592401339469422Otherincomeexp15331346822849813CashfromCBraised6325222---netPre-taxIncome601234171727493414Others4119513---FinancingCF295944691339469422IncomeTax9784100275512Netprofit6251155161724742902Netchangeincash79274664647519122301Adjnetprofit45491266252334423908Cashbegofyr10941307571121358715499FX217----Cashendofyr30757112135871549917800BalancesheetKeyratiosYE31DecRMBmnFY21AFY22AFY23EFY24EFY25EYE31DecFY21AFY22AFY23EFY24EFY25ENon-currentassets3094832263293853091732416SalesmixFixedasset13451105184620882291Membership547611638645650servicesLong-terminvestments30352454245424542454Onlineadvertising231184193191188servicesLicensedcopyrights72586841679470967408Contentdistribution9385747271netOthers1931021864182921928020263Others128120959290Total10001000100010001000Currentassets1152413786216312375726114Cash29977098135731548517786GrowthrateRestrictedcash7814141414Revenue29511176840Short-terminvestments1348818818818818Grossprofit668119627316888Accountreceivable27482403304532053282EBITNANA934418175Others43533453418142364213AdjnetprofitNANA993364135Currentliabilities2247628130301223033830286PLratiosAccountpayable88965993778880388132Operatingmargin1474578104118Customeradvances34854232385541174280Pre-taxmargin19701537995anddeferredrevenueAccruedliabilities31722626291430083069Adjnetmargin1494478100109Short-termborrowings41183348468742183796Effectivetaxrate0303030814Others280611931108781095811009ReturnsNon-currentliabilities1432311575115751157511575ROE106005184215205Convertibleseniornotes126529568956895689568ROA10727496367Others167020072007200711575PershareMI8893939393EPSRMB564150266362408TotalEquity53646436104711391217820DPSRMB000000000000000Shareholdersequity52766343103781382017728BVPSRMB096100158209266SourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE623Aug2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMoritsaffiliateshaveinvestmentbankingrelationshipwiththeissuerscoveredinthisreportinpreceding12monthsCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE7