Incidents:
The company released its 2023 annual report and 2024 quarterly report.
Comment:
Net profit to the mother grew rapidly. Golden Eagle Cartoon exceeded its performance promise. In 2023, the company achieved operating income of 14.628 billion yuan, an increase of 4.66% over the previous year. Of these, Q4 achieved revenue of 4.262 billion yuan in a single quarter, an increase of 21.16% over the previous year. Net profit attributable to mother for the year was 3,556 billion yuan, up 90.73% year on year; net profit after deducting non-return to mother was 1,695 billion yuan, up 5.70% year on year. During the year, Golden Eagle Cartoon achieved net profit of 634.737 billion yuan, net profit deducted from non-mother of 475.432 billion yuan, and completed 102.79% of this year's performance promise. 2024Q1 achieved revenue of 3.324 billion yuan, an increase of 7.21% over the previous year, net profit of 472 million yuan to mother, and net profit of 467 million yuan after deducting non-return to mother.
Continuing to consolidate the advantages of video content, the high-quality development of membership services. In 2023, Mango TV's effective broadcast volume of full-network variety shows increased 31% year-on-year, and the effective broadcast volume of full-length series on the entire network rose 46% year on year, ranking first in the video industry. During the year, Mango TV launched more than 100 variety shows of all kinds, leading the industry in terms of number of new releases, number of solo broadcasts, and innovation rate. In addition, the company and Douyin have jointly created a “Quality Short Drama Support Program” to explore new spaces for long and short drama collaboration. In 2024, the company will reserve more than 80 movies and 100 short dramas to maintain the supply capacity of high-quality series. By business, in 2023, the number of members of the company reached a new high. The number of effective members reached 66.53 million, and annual membership revenue exceeded 4.315 billion yuan, an increase of 10.23% over the previous year. Membership growth and content investment formed a virtuous cycle. In 2023, the company's advertising business achieved revenue of 3,532 billion yuan, a year-on-year decrease of 11.57%, and 23Q4 advertising revenue was corrected to 15.95% year-on-year. The annual revenue of the operator business was 2,767 billion yuan, an increase of 10.27% over the previous year, and continued to drive the increase in IPTV business revenue.
Build a diversified and deeply integrated mango ecosystem, and actively explore the application of AI technology in 2023. The company completed the acquisition of Golden Eagle Cartoon, and the “four platforms” model of Mango TV+ Hunan TV + Golden Eagle Cartoon+Xiaomang e-commerce gradually took shape. In 2023, Golden Eagle Cartoon successfully fulfilled its performance promise and deepened the company's content moat on the parent-child circuit. Relying on Mango's high-quality content IP and artist resources, Xiaomang E-Commerce's annual GMV exceeded 10 billion yuan, and the GMV of the first self-operated fashion clothing brand “Nanbowan” exceeded 270 million yuan. The company actively explores the implementation of cutting-edge AI technology and launched 40+ AI products, and AI generated more than 1 million short videos, drastically reducing content promotion costs and platform customer acquisition costs. At the same time, the company cooperated with big model companies to talk to AI characters and connect with Dafeng IP to experiment with new business models and increase user stickiness and activity.
Investment advice and profit forecasting
As a state-owned video new media company, the company relies on Mango's characteristic integrated media ecosystem, with Internet video platform operation as the core, and upstream and downstream collaborative development. We expect that in 2024-2026, the company will achieve net profit of 21.21/23.41/2,565 billion yuan, and EPS of 1.13/1.25/1.37 yuan, respectively, corresponding to PE20/18/16 times, maintaining a “buy” rating.
Risk warning
The content performance falls short of expected risks, risks of new business development falling short of expectations, risks of macroeconomic fluctuations, policy risks, etc.