Revenue growth was steady, and income tax policy adjustments disrupted performance. 1) For the full year of '23, the company achieved operating income of 14.628 billion yuan and net profit of 3,556 billion yuan, corresponding to fully diluted EPS of 1.9 yuan; in a single quarter of Q4, the company achieved revenue of 4.432 billion yuan and net profit to mother of 1.79 billion yuan, up 27.9% and 1120.8% year-on-year respectively; the sharp increase in full-year and Q4 performance was mainly due to one-time income of 1,629 billion yuan due to changes in income tax policies 2) The company achieved operating income of 33.24 billion yuan in Q1 in 2024 Net profit of 100 million yuan and net profit to mother was 461 million yuan, up 8.8% and -12.8%, respectively, corresponding to fully diluted EPS of 0.25 yuan; revenue growth performance was steady, and the decline in performance was mainly due to the impact of the expiration of the income tax exemption policy; 3) It is planned to distribute cash dividends of 1.80 yuan (tax included) for every 10 shares in '23.
Member and operator services have maintained good performance, and the content ecosystem continues to improve. 1) The number of active members of Mango TV reached 66.53 million, with annual membership revenue of 4.315 billion yuan, up 10.23% year on year; 2) The operator business achieved annual revenue of 2,767 billion yuan, up 10.27% year on year; 3) Effective broadcast volume of variety shows across the network rose 31% year on year in 2023, and the effective broadcast volume of full-network series movies rose 46% year on year, ranking first in the long video industry; it launched over 100 shows of all kinds of variety shows, with new numbers, unique numbers, and innovation rates It is at the top of the industry list; 128 series of various series, including key movies and TV dramas and the “Big Man Project” short drama, were launched; and the “Quality Short Drama Support Program” was jointly created with Douyin, and “Wind and Moon Changes” became the first starred short drama in China. In 2024, the company will reserve more than 80 movies and 100 short dramas to further enhance the supply capacity of high-quality series.
The advertising business is recovering at an accelerated pace. 1) In 2023, the advertising business achieved revenue of 3,532 billion yuan, down 11.57% from the first half of the year; among them, advertising revenue increased 15.95% year on year in the fourth quarter; 2) The platform value of Mango TV brand marketing was further highlighted, and efforts were made to expand leading brand customers in key industries such as Internet platforms, liquor, food, etc., accounting for one-third of the new customer development.
AIGC and other new technology fields continue to be deployed. 1) Currently, more than 40 AI products have been launched, which are used in business scenarios such as media operation, advertising, member interaction, video editing, and content production; AI has produced more than 1 million short videos, greatly reducing content promotion costs and platform customer acquisition costs; developing AIGCHUB application platforms and cooperating with big model companies to launch AI character dialogue products to test the waters for new monetization models to increase user stickiness and activity.
Risk warning: Membership growth falls short of expectations; technology development falls short of expectations; new business development falls short of expectations, etc.
Investment advice: Considering income tax policy adjustments, we lowered our profit forecast. We expect net profit to be 19.6/2.19 billion yuan for 24/25 (previous values were 24.29 billion yuan, respectively), adding a 26-year forecast of 2.44 billion yuan, corresponding EPS of 1.05/1.17/1.30 yuan, PE = 21/19/17x for the same period. We continue to be optimistic about the company's content and platform operation advantages and growth potential in the AIGC era, and maintain a “buy” rating.