Investment Rating - Buy (First Coverage) [1] Core Views - The company's ARM (Average Revenue per Member) has grown for six consecutive quarters, reaching a historical high in 2024Q1 [2] - The company's content distribution revenue reached a historical high in 2024Q1, indicating strong content production capabilities [2] - The company's market share in key content categories continues to lead, with over 70% of new programs being original content [2] - The company's non-GAAP operating profit margin improved by 2 percentage points year-over-year to 14% in 2024Q1 [5] Business Performance - Total revenue for 2024Q1 decreased by 5% year-over-year to RMB 7.9 billion (USD 1.1 billion) [5] - Membership service revenue decreased by 13% year-over-year to RMB 4.8 billion (USD 660 million) in 2024Q1, mainly due to a high base effect from the previous year [2] - Online advertising service revenue increased by 6% year-over-year to RMB 1.5 billion (USD 210 million) in 2024Q1, driven by growth in performance advertising [2] - Content distribution revenue increased by 28% year-over-year to RMB 930 million (USD 130 million) in 2024Q1 [2] - Other revenue increased by 7% year-over-year to RMB 720 million (USD 100 million) in 2024Q1, mainly due to increased revenue from third-party collaborations [2] Content Strategy - The company has a diversified and high-quality content portfolio, with over 70% of new programs being original content [2] - Key programs such as "Chasing the Wind" and "Southbound and Northbound" have achieved significant market share and viewership records [2] - The company continues to innovate in content categories such as movies, variety shows, children's programs, and animation [2] Financial Forecast - Non-GAAP net profit attributable to the parent company is expected to be RMB 3.12 billion, RMB 3.80 billion, and RMB 4.45 billion for 2024, 2025, and 2026, respectively [2] - The current stock price corresponds to a PE ratio of 10x, 9x, and 7x for 2024, 2025, and 2026, respectively [2] Cost and Profitability - Operating costs decreased by 5% year-over-year to RMB 5.6 billion (USD 780 million) in 2024Q1, with content costs also decreasing by 5% to RMB 4.0 billion (USD 550 million) [15] - Non-GAAP operating profit increased by 5% year-over-year to RMB 1.1 billion (USD 150 million) in 2024Q1 [16] - The company generated positive operating cash flow for eight consecutive quarters, with free cash flow of RMB 920 million (USD 130 million) in 2024Q1 [16] Content Pipeline - The company has a rich content pipeline for 2024-2025, including dramas, variety shows, and movies, with a focus on original and high-quality content [12][13][14]
爱奇艺：2024Q1业绩点评：ARM连续六个季度增长，营业利润率显著改善