Introduction to this report:
Q1 continues to lead the Nth generation. Starting in Q2, “Ride the Wind 2024” and “Singer 2024” will be broadcast one after another, and the performance is expected to continue the steady, moderate and positive trend; in terms of innovation, the company has launched more than 40 AI products, and the effects of cost reduction and efficiency are beginning to show.
Key points of investment:
Maintain an “Overweight” rating. We keep the 2024-2025 EPS forecast value of 1.12/1.25 yuan unchanged, and added the 2026 forecast value of 1.45 yuan. We maintain 30X PE in 2024, maintain the target price of 33.60 yuan, and maintain the “gain” rating.
Incident: On April 21, the company released financial reports for 2023 and 2024Q1. The total revenue for the full year of 2023 was 14.63 billion yuan, up 4.7% year on year, and realized net profit of 3.56 billion yuan, up 90.7% year on year; achieved 66.53 million members at the end of 2023, up 12.5% year on year, achieved annual membership revenue of 4.32 billion yuan, up 10.2% year on year, and achieved advertising revenue of 3.53 billion yuan, down 11.6% year on year; 2024Q1 achieved revenue of 3.32 billion yuan, year over year It increased by 7.2% and achieved operating profit of 545 million yuan, an increase of 7.39% over the previous year. The performance was in line with expectations.
Generation N continues to lead, and “Ride the Wind 2024” and “Singer 2024” will be broadcast one after another starting in Q2.
According to Yunhe data, the overall market share of 2024Q1's leading network reached 51.9%. Among them, “Big Detective 9”/“Flowers and Youth: Silk Road Season”/“Endless Sound Life · Family Year” ranked in the TOP3 with a market share of 10.5%/8.6%/4%, respectively. Looking ahead, we look forward to seeing more of the N generation. Among them, “Ride the Wind 2024” was launched on April 19, and the number of broadcasts reached a record high in the first two days. In terms of dramas, “With the Phoenix” was popular among brands, and the number of advertisers reached 38 during the broadcast period.
The company launched more than 40 AI products, which have innovative applications in various scenarios such as video editing, member interaction, and content production. In terms of video editing, the company uses AI technology to produce more than 1 million short videos, drastically reducing the advertising costs of variety shows such as “Breaking Through the Barriers” and “Everyone Is Accelerating” and the customer acquisition costs of Mango TV; in terms of member interaction, the company relies on popular series such as “Dasong Youth Chronicles 2” and “Running with Love” to explore AI chat applications to develop new monetization models; in addition, the company's AIGC audio dramas, AIGC copywriting, and AIGC posters have been widely used.
Risk warning: Membership growth falls short of expectations, etc.