Core views
The company published an annual report for '23 and a quarterly report for '24. Among them, membership and advertising businesses achieved 36% and 16% growth respectively in 4Q23. The growth rate of the membership business has increased markedly, and the advertising business is gradually stabilizing. We are optimistic about the long-term growth of the company's business.
1. Membership: Content+channel, driving a year-on-year increase in the number of members and ARPPU. At the end of '23, Mango TV's paid members reached 66.53 million, an increase of 12.5% over the previous year. I'm optimistic that the 24-year membership will grow even more rapidly: in terms of content, production capacity of the 24-year series has increased markedly, and series such as “With the Phoenix” and “Asking the Pang Mang” have outstanding performance. Top series (collaboration with mature companies such as Huace) +small to medium quality dramas (mainly monsoon homemade) +short dramas (Douyin collaboration) have a healthy structure.
In terms of channels, it is tied to mature members such as operators to seek further growth.
2. Advertising: The influence of leading variety shows has increased, and investment promotion has stabilized. 4Q23 advertising revenue increased 15.95% year over year, and the growth rate recovered. Leading variety shows such as “Ride the Wind” and “The Big Detective” are highly influential. Investment promotion has stabilized, and efforts have been made to expand leading brand customers in key industries such as the Internet, liquor, and food. New customer development accounts for one-third.
At the profit level, income tax in the first quarter led to a decline in profit. Excluding changes in tax rates, 1Q24 operating profit was 547 million yuan, an increase of 4% over the previous year, and the performance was steady. We expect the company to achieve net profit of 2.03 billion, 2.30 billion, and 2.53 billion in 24-26, a year-on-year change of -43.0%, 13.6%, and 10.1%. The latest market capitalization corresponding PE is 20.3x, 17.9x, and 16.3x, which is currently recommended.
occurrences
The company published an annual report for '23 and a quarterly report for '24. The company achieved operating income of 14.63 billion yuan in 2023, +4.7% year on year, realized net profit of 3.56 billion yuan, +90.7% year on year, and realized net profit without deduction of 1.70 billion yuan, +5.7% year on year.
Looking at a single quarter, 1Q24 achieved operating income of 3.32 billion yuan, +7.2% year-on-year, realized net profit of 4.7 billion yuan, -13.9% year-on-year, and realized net profit without deduction of 467 million yuan, or -10.4% year-on-year. Excluding income tax impacts, the Q1 operating profit side was +4% year-on-year.
The total amount of cash dividends proposed for '23 is $337 million, and the dividends for 20-22 are $230 million, $240 million, and $240 million. The amount has increased in '23.
Investment advice: The growth rate of the company's membership business has increased markedly, and the advertising business is gradually stabilizing. We are optimistic about long-term growth. Among them, members relied on content+ channels, driving the number of members to double as ARPPU; in terms of advertising, the influence of leading variety shows increased, and investment promotion stabilized. At the profit level, income tax in the first quarter led to a decline in profit. Excluding changes in tax rates, 1Q24 operating profit was 547 million yuan, an increase of 4% over the previous year, and the performance was steady. We expect the company to achieve net profit of 2.03 billion yuan, 2.30 billion yuan, and 2.53 billion yuan over the previous year, with year-on-year changes of -43.0%, 13.6%, and 10.1%. The main reason is that in 23, the company expects changes in applicable income tax policies in the future to re-measure deferred income tax assets and liabilities. The related impact of 1,628 billion yuan is included in 23 non-recurring profit and loss, resulting in a high 23 year performance base. The PE corresponding to the latest market capitalization is 20.3x, 17.9x, and 16.3x, which is currently recommended.
Risk warning: Advertisers' business recovery falls short of expectations, risk of macroeconomic fluctuations, consumption recovery falls short of expectations, brand advertising falls short of expectations, risk of declining user disposable income, risk of rapid changes in user content preferences, failure to improve episode capacity as expected, risk of falling user payment capacity, risk of falling number of members due to price increases, risk of falling number of members, risk of falling performance of leading programs, risk of falling short of expectations, risk of IPTV user growth falling short of expectations, risk of rising content costs, loss of core creatives, The risk that the ROI of some projects falls short of expectations; the risk that industry competition increases; the risk that generative AI technology development falls short of expectations; the risk that technology integration in various fields falls short of expectations; the risk of delays in key projects; and the risk of content review and supervision.