Revenue growth was steady in the first half of the year, and the impact of income tax policies led to a decline in the company's operating profit. The company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 6.96 billion yuan, a year-on-year increase of 2.46%, achieved net profit due to mother 1.065 billion yuan, a year-on-year decrease of 15.45%, and realized net profit deducted from non-mother of 0.912 billion yuan, a year-on-year decrease of 22.96%. The company's revenue continued to grow steadily in the first half of the year, and net profit declined year-on-year, mainly due to changes in the company's preferential corporate income tax policy in the first half of the year. The company's operating cash flow in the first half of 2024 was 0.18 billion yuan, mainly due to the company continuing to increase its head content reserves, which led to a short-term decline in net operating cash flow. 24Q2 continued to consolidate its leading edge in variety shows. Popular content such as “Singer 2024” drove the company's revenue and profit to rise sequentially in the second quarter. 24Q2 achieved revenue of 3.636 billion yuan, down 1.52% year on year, up 9.36% month on month, and achieved net profit of 0.593 billion yuan, down 16.68% year on year and 25.45% month on month, achieving net profit without return to mother 0.445 billion yuan, down 31.98% year on year and up 4.67% month on month.
Popular content was frequent, and membership revenue increased 26.77% year over year. 24H1 launched a total of 56 variety shows, an increase of 17 over the same period last year. The effective broadcast volume of variety shows has steadily ranked first in the industry, and continues to consolidate its leading edge in variety shows. In terms of dramas, the company focused on the development and layout of leading series by setting up a quality control center for drama evaluation, building a self-made super studio for movies and TV dramas, and implementing the “Xinmang S Plan” super partner system, and launched popular series such as “Happy Parent Group” and “Just the Right Time”. Driven by popular content, 24H1 achieved membership revenue of 2.486 billion yuan, an increase of 26.77% over the previous year, accounting for more than 50% of the Internet video business revenue. Through innovative member benefit systems, the company raised users' perception of value and willingness to pay, and continued to increase ARPPU value. In terms of advertising business, although the entire advertising industry showed a certain recovery trend in the first half of the year, the recovery was relatively weak. 24H1's advertising business achieved revenue of 1.721 billion yuan, which remained stable over the previous year. In the future, the company will rely on solid content advantages and platform traffic advantages. Through innovative marketing strategies and optimization of AI algorithms, the company is expected to accelerate the pace of recovery of the advertising business.
Carrier business declined in the short term, and new business formats such as Xiaomang e-commerce maintained rapid growth. 24H1's operator business revenue was 0.75 billion yuan, a year-on-year decline. The company actively implemented the TV industry governance work plan and comprehensively optimized related services. 24H1 Xiaomang e-commerce's GMV reached 6.65 billion yuan, an increase of nearly 50% over the previous year. While maintaining a rapid expansion trend, losses were reduced by nearly 40%, achieving multi-level conversion and monetization of traffic.
Profit forecasting and valuation. We expect the company's 2024-2026 EPS to be 1.00, 1.16, and 1.37 yuan/share, respectively. Referring to comparable companies, we gave the company 25 to 30 times dynamic PE in 2023, with a corresponding reasonable value range of 25.00 to 30.00 yuan/share, maintaining the company's “superior to the market” rating.
Risk warning. New media copyright prices are rising, and policy regulation is uncertain.