盈利预测与投资建议24Q4's revenue was 7.46 billion yuan (yoy +8%, qoq +6%) and gross profit margin of 43.6% (yoy+5.3pp, qoq+1pp), mainly due to strong growth in revenue from music subscriptions and advertising services, as well as the gradual increase in original content. 25Q1, we expect revenue to reach 7.27 billion yuan (yoy +7%, qoq -3%), mainly due to fluctuations in the social entertainment business during the off-peak season. We expect revenue to reach 31 billion yuan (yoy +9%) for the full year. Q4 sales cost 0.25 billion yuan, rate 3.3% (yoy-0.37pp, qoq+0.19pp). Q4 General administrative expenses were 0.93 billion yuan, and the rate was 12.4% (yoy-2.25pp, qoq-1.81 pp). The main reason for the year-on-year decline in expenses was the reduction in the company's personnel expenses. Q4 IFRS net profit of 1.96 billion yuan (yoy +49.9%, qoq +23.6%); Q4 non-IFRS net profit of 2.28 billion yuan (yoy +44.8%, qoq +25.7%). 25 We expect IFRS net profit to be 7.65 billion yuan (yoy +15%) for the full year.
24Q4 online music service revenue: 5.83 billion yuan (yoy +16.1%, qoq +6.4%), mainly due to the growth of music subscription revenue and advertising revenue. We expect 25Q1 revenue to reach 5.8 billion yuan (yoy +15.9%, qoq -0.5%). Q4 MAU 0.56 billion (yoy -3.5%, qoq -3.5%); Q4MPU 0.12 billion (yoy +13.4%, qoq +1.7%), of which SVIP exceeds 10 million; ARPPU is 11 yuan/month (yoy +3.7%, qoq +2.8%). We expect the ARPPU of 25Q1 companies will continue to increase as the penetration rate of the ARPPU membership package with higher SVIP increases, or reach 11.3 yuan/month, and MPU 0.123 billion.
24Q4 social entertainment service revenue: 1.63 billion yuan (yoy -13.0%, qoq +6.0%). The year-on-year decrease was mainly due to adjustments to live streaming interactive features and stricter compliance procedures. 24Q4 MAU 0.082 billion (yoy -21%, qoq -9%); MPU 0.008 billion (yoy -3.8%, qoq -2.5%). We expect 25Q1 revenue to reach 1.46 billion yuan (yoy -17%, qoq -10%). The year-on-year decline is mainly due to continued tightening of corporate compliance combined with macroeconomic factors.
Profit prediction and investment advice
With the increase in online music paying users and ARPPU, the company's share of online music revenue in the overall structure continues to increase, and the profit margin side is expected to continue to be optimized. We expect net profit to be 6.6/7.6/9.1 billion yuan for 24-26 (the original forecast value for 24-26 was 6.4/7.9/9.5 billion yuan, adjusted for profit forecasts due to a reduction in live streaming business revenue, interest income, etc. for 25-26). Referring to comparable companies, P/E was given 28 times for 25 years, and the target price was 66.89 Hong Kong dollars (61.77 yuan), maintaining the “buy” rating.
Risk Alerts
Risk of pattern reshuffle brought about by the launch of the Douyin music platform; risk of live streaming supervision; increased risk of competition within the live streaming industry
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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