Netflix(NFLX) 安信国际证券·2024-09-02 06:49Investment Rating and Target Price - The report initiates coverage on Netflix with a Buy rating and a target price of **701.35 [1][3] - The valuation is based on a 10-year DCF model and cross-verified with relative valuation methods, estimating Netflix's equity value at **7.3 billion deducted) [2] Core Investment Thesis - Netflix is the global leader in video streaming, with a 2.78 billion subscriber base as of 2Q24, significantly ahead of competitors like Disney+ (1.5 billion) and Amazon Prime Video (1.2 billion) [1][7] - The company is expected to achieve a 12.9% CAGR in total revenue from 2024 to 2027, driven by 8.7% CAGR in streaming revenue and 9% advertising revenue contribution by 2026 [1][2] - Netflix's globalization strategy is a key strength, with 70% of subscribers and 55% of revenue coming from outside the US & Canada [1][7] Subscriber Growth and Market Penetration - Netflix is projected to add 18.6 million, 15.8 million, and 17 million net subscribers in 2025, 2026, and 2027, respectively, reaching 340 million subscribers by 2027 [1][8] - Key growth drivers include content investment, ad-supported plans, and crackdown on password sharing, with EMEA and APAC regions expected to contribute the most to subscriber growth [1][8] - The company has a 5 billion addressable market of pay-TV households globally, with significant potential in markets like France, Spain, Japan, South Korea, and India [1][8] Content Strategy and Competitive Advantage - Netflix's original content accounts for 60%+ of its content library, with a high ROI as the monthly content amortization cost per subscriber is 40%-50% of ARM [1][7] - The company has won 184 Emmy Awards, 29 Golden Globes, and 22 Oscars, showcasing its content quality and production efficiency [8] - Netflix's recommendation algorithm and user insights are key competitive advantages, with 80%+ of viewing time driven by personalized recommendations [7][8] Advertising Business Potential - Netflix's ad-supported plan is expected to contribute 9.4% and 11% of total revenue in 2026 and 2027, respectively, with advertising revenue projected to reach 6.2 billion in those years [2][9] - The ad-supported plan is gaining traction, with 40 million MAUs as of May 2024, and is expected to achieve parity with standard subscription plans in the long term [9][42] Financial Projections - Netflix's revenue is expected to grow from 55.7 billion in 2027E, with a 14.8% YoY growth in 2024 [2][3] - Net profit margin is projected to increase from 22.4% in 2024E to 24.5% in 2027E, with net income CAGR of 16.4% from 2024 to 2027 [2][3] - The company's operating margin is guided at 26% for 2024, with expectations of further improvement to 28% by 2027 [2][9] Industry Overview and Competitive Landscape - Netflix is the leading independent streaming platform in the US, with streaming surpassing cable TV in viewership share in 2022 [7] - The streaming market is divided into three categories: independent platforms (Netflix), tech companies (Amazon, Apple), and media conglomerates (Disney, Paramount) [7] - The US digital entertainment market is projected to reach 80 billion, making it the largest segment alongside gaming [60][63] Valuation Metrics - Netflix's 2024E P/E ratio is 34.7x, declining to 22.0x by 2027E, while the P/S ratio is expected to drop from 7.8x in 2024E to 5.4x in 2027E [3] - The company's ROE is projected to increase from 38.9% in 2024E to 43.4% in 2027E, reflecting strong profitability and efficient capital allocation [3]