Incidents:
The company released its 2024 semi-annual report: operating income of 6.96 billion yuan, a year-on-year increase of 2.46%; net profit to mother was 1.065 billion yuan, a year-on-year decrease of 15.45%.
The revenue side has stabilized, and net profit is still affected by changes in preferential tax policies.
In the first half of 2024, the company's performance declined, mainly due to changes in preferential corporate income tax policies. The company achieved operating profit of 1.233 billion yuan, an increase of 2.15% over the previous year. Looking at a single quarter, the company's revenue for the second quarter of 2024 was 3.636 billion yuan, up 9.36% from quarter to quarter, and net profit to mother was 0.593 billion yuan, up 25.45% from quarter to quarter. Affected by the decline in gross margin of the main business, the company's gross margin for the first half of 2024 was 28.84%, down 6.26pct year on year.
The membership business is the core driver, and the operator business is under pressure.
By business, in the first half of 2024, Mango TV's Internet video business was the company's main source of revenue, achieving revenue of 4.957 billion yuan, accounting for 71.23% of total revenue, with gross margin of 36.11%; new media interactive entertainment content production business revenue of 0.634 billion yuan, accounting for 9.10%, gross profit margin of 28.09%; content e-commerce business revenue of 1.357 billion yuan, accounting for 19.49%, gross profit margin 2.70%, Xiaomang e-commerce GMV reached 6.65 billion yuan, a year-on-year increase of nearly 50%. In the Internet video business, membership business revenue was 2.486 billion yuan, up 26.8% year on year, the core driver of performance growth; advertising business revenue was 1.721 billion yuan, down 3.9% year on year, slightly fluctuating, and the overall recovery trend remained unchanged; operator business revenue was 0.75 billion yuan, a decrease of 46.0% year on year, mainly due to the company's comprehensive optimization of TV screen related services in response to TV industry governance arrangements, and the business was affected to a certain extent in the short term.
The second half of 2024 is rich in content reserves, focusing on developments in new directions such as skits and going overseas.
The increase in membership revenue confirmed the high quality of the company's content. In the first half of 2024, the Mango variety show was stable, and “Singer 2024” became the program with the highest percentage of new Mango TV members since this year; the drama performance was remarkable, and broadcast data such as “With Feng Xing” and “Happy Parent Group” was impressive. Looking ahead to the second half of the year, key shows such as “Crossing the Pines 4”, “Flowers and Boys 6”, “Endless Sound: Hong Kong Music Season 2”, “Flowers Bloom”, and “Dance Wild Flowers” will lay a solid foundation for popular variety shows. In terms of movies and TV dramas, the company reserves more than 80 movies and TV series, and content investment is gradually having a large-scale effect. A series of works such as “National Color Fanghua”, “People in the Alley”, “Water Dragon Song”, “Brilliant Wind and Sea”, “Long Song”, and “180 Day Restart Plan” all have the potential to be blockbuster series. In terms of skits, Mango TV launched the “Mango Short Drama” vertical screen skit channel, creating an immersive broadcast scene suitable for vertical screen dramas. In total, more than 150 vertical screen skits have been launched, and it is expected that no less than 300 high-quality vertical screen skits will be launched throughout the year. Furthermore, the Mango TV international app doubling plan was implemented and the number of overseas downloads exceeded 0.19 billion.
Investment advice:
The company's revenue for 2024-2026 is estimated to be 16.399 billion yuan, 17.893 billion yuan, 19.296 billion yuan, and net profit of 2.008 billion yuan, 2.293 billion yuan, and 2.478 billion yuan; given a buy-A investment rating, the 6-month target price is 26.75 yuan, which is equivalent to a dynamic price-earnings ratio of 25.0x in 2024.
Risk warning: Risks such as content performance falling short of expectations, new business development falling short of expectations, and loss of talent.