The company released its 2023 financial report & 2024 quarterly report: 1) Annual operating income of 14.628 billion yuan, +4.66% year on year, net profit to mother of 3.556 billion yuan, +90.73% year on year, net profit after deducting non-return to mother of 1,695 billion yuan, +5.70% year on year; the total amount of non-recurring profit and loss was 1,860 billion yuan, of which the impact of deferred income tax expenses was -1,629 billion yuan. 2) 24Q1 achieved operating income of 3.324 billion yuan, +7.21% year-on-year, net profit to mother of 472 million yuan, -13.85% year-on-year, net profit of 467 million yuan after deducting non-return to mother net profit of 467 million yuan, or -10.40% year-on-year. Due to the expiration of the corporate income tax exemption policy, 24Q1 confirmed a year-on-year increase of 87.922 million yuan in income tax expenses and a year-on-year decline in profit after tax.
The basic market of the main Internet video business of Mango TV continues to improve: advertising revenue is recovering at an accelerated pace, and member and operator business is growing steadily. Overcoming difficulties and showing resilience throughout 2023:1) advertising revenue of 3.532 billion yuan, -11.57%, the decline narrowed markedly; 2) Member revenue was 4.315 billion yuan, +10.23% year over year; by the end of 2023, the number of active Mango TV members reached 66.53 million; 3) Operator business revenue was 2,767 billion yuan, +10.27% year over year. 2023Q4's revenue in a single quarter reached a record high: 4.262 billion yuan in a single quarter, a record high of revenue in a single quarter. The 2024Q1 off-season started well: revenue of 3.324 billion yuan in a single quarter, +7.21% year over year, and operating profit of 547 million yuan, +3.69% year over year.
Fully open up content creation and operation, and give full play to business synergy: Golden Eagle cartoons reinforce the parent-child content circuit, and Xiaomang e-commerce continues to develop rapidly. In 2023, Golden Eagle Cartoon focused on content operations, brand marketing, offline parks, etc. to explore content monetization paths, achieving net profit of 63.47 million yuan and achieving performance promises; Xiaomang e-commerce's annual GMV exceeded 10 billion yuan, and content e-commerce revenue increased 32.14% year over year, reaching 2,823 billion yuan.
2024 outlook: Featured content is frequent, variety shows continue to lead, and series performance is remarkable. The stable output of variety shows in the first quarter: “Big Detective Season 9”, “Flowers and Youth: Silk Road Season” and “Family Years” led the online market; the series performed well: “With the Phoenix” fault reached the top of the monthly broadcast volume list in March, and “Happy Parent Group” and “On the River Day” also had impressive data. There is plenty of premium content throughout the year: the reserves of high-quality variety shows and series such as “Ride the Wind 2024,” “The Singer 2024,” “The Fourth Season,” “National Color Fanghua,” and “Water Dragon Yin” are expected to drive the number of members and advertising revenue to the next level.
Investment advice: The company's revenue for 2024-2026 is estimated to be 16.398 billion yuan, 17.892 billion yuan, 19.295 billion yuan, net profit of 2,008 billion yuan, 2,495 billion yuan, and 2,481 billion yuan; given a buy-A investment rating, the target price for 6 months is 26.75 yuan, which is equivalent to a dynamic price-earnings ratio of 25.0x in 2024.
Risk warning: Risks such as content performance falling short of expectations, new business development falling short of expectations, and loss of talent.