Mango Supermedia's net profit margin was stable after deduction in 2023, and 24Q1 revenue and total profit increased slightly; high-quality content led the growth of membership business in 2023, and the advertising business accelerated recovery. We believe that in 2024, Mango TV variety content will remain highly competitive, enhance the supply of long and short dramas, and further drive member revenue growth and advertising recovery. Maintain a buy rating.
Key points to support ratings
Net profit margin was stable after deduction in 2023, and total revenue and profit increased slightly in 24Q1. The company's revenue in 2023 was 14.628 billion yuan, +4.7% year on year; net profit due to mother in 2023 was 3,556 billion yuan, +90.7% year on year after adjustment; net profit after deduction is estimated to be 1,695 billion yuan, +5.7% year on year after adjustment. Non-recurring profit and loss for the year was $1,860 billion, of which $1,629 billion was a one-time adjustment to income tax expenses due to changes in the company's applicable tax rate in the future. In 2023, the company's gross profit margin was 32.98%, -1.1 ppts year over year. The three expense ratios did not change much. Q1 revenue in 2024 was $3,324 million, +7.2% year on year after adjustment, and net profit to mother was 472 million yuan, -13.9% year-on-year after adjustment. 24Q1 operating profit was +3.7% year-on-year, but due to changes in tax rates, confirmed income tax expenses for the current period increased by 87.99 million yuan compared to the same period last year, leading to a year-on-year decline in after-tax profit.
Quality content is leading the growth of membership business, and the advertising business is recovering at an accelerated pace. In 2023, Mango TV's Internet video business revenue was 10.614 billion yuan, +1.9% year-on-year. Among them, membership revenue was 4.315 billion yuan, +10.2% year over year, 23Q4 membership revenue +35.6% year over year; the number of active members at the end of the year reached 66.53 million, +12.5% year over year. The advertising business recovered at an accelerated pace, with annual advertising revenue of 3,532 billion yuan, -11.6% year-on-year. The decline was significantly narrower than in the first half of the year. 23Q4 advertising revenue was +16.0% year-on-year. Mango TV operator's business revenue was 2,767 billion yuan, +10.3% year-on-year, maintaining a steady growth rate. New media interactive entertainment content production revenue was 1.50 billion yuan, -17.3% year-on-year. Content e-commerce revenue was 2,823 billion yuan, +32.1% year-on-year.
Among them, Xiaomang's e-commerce revenue was 1,021 billion yuan, the annual GMV exceeded 10 billion yuan, the first self-operated fashion clothing brand “Nanbowan” GMV exceeded 270 million yuan, and a net loss of 250 million yuan in 2023.
Maintain the advantage of variety show content, increase the supply of series, and enter vertical screen skits. According to Yunhe data, in 2023, the effective broadcast volume of full-length variety shows on Mango TV was +31%, and the effective broadcast volume of full-network series was +46%. The growth rate both ranked first in the long video industry. In 2024, the company will reserve more than 80 movies and 100 short dramas to further enhance the supply capacity of high-quality series. On April 19, Mango TV released launch information for the two vertical screen skits “Finding a Crown Prince” and “In the Name of Love”. Producers include Mango TV and Damang Theatre. The head of the company's Damang Project Studio said that it is expected that 200 vertical screen applet dramas will be produced and launched this year. We believe that the previous collaboration between Mango TV and Douyin is expected to promote the diversion of big vertical screen skits from the perspective of ecological traffic.
valuations
We believe that Mango TV has a strong content production gene. The production capacity and reserves for long and short dramas are sufficient, and the variety content advantage remains at the forefront. Considering the impact of changes in income tax rates, we lowered net profit to mother in 2024/25/26 to 22.68/24.47/2,618 billion yuan, EPS 1.21/1.31/1.40 yuan, corresponding to PE 19.42/18.00/16.82 times, maintaining the purchase rating.
The main risks faced by ratings
Membership growth falls short of expectations; advertising falls short of expectations; content regulation exceeds expectations; industry competition intensifies.