20260423-招银国际-1Q26E_preview_Earnings_face_ST_pressure_intact_core_business_outlook_5页_1018kb

iQiyi (IQ US) 1Q26E Earnings Summary and Business Outlook

Core Content and Key Information

iQiyi's first-quarter 2026 earnings forecast indicates a decline in total revenue and a non-GAAP net loss, primarily due to challenges in the content distribution and other non-core businesses. However, the company's core membership business is expected to remain resilient, and cash flow generation is anticipated to improve.

Revenue and Profit Forecast

• Total Revenue: Expected to drop by 14% YoY and 9% QoQ to RMB6.2bn.
• Non-GAAP Net Loss: Projected at RMB249mn, down from a net income of RMB308mn in 1Q25.
• Bloomberg Consensus: Predicts a RMB152mn net loss, which is less severe than the forecasted loss, indicating the company's performance may be better than expected.

Business Segments

• Membership Revenue: Expected to decline by 5% YoY but recover by 2% QoQ to RMB4.2bn, driven by strong performance of hit titles such as Pursuit of Jade and How Dare You.
• Online Advertising Revenue: Projected to fall by 8% YoY and 10% QoQ to RMB1.2bn due to a relatively low season.
• Content Distribution Revenue: Expected to decrease by 44% YoY and 55% QoQ to RMB352mn, as iQiyi adjusts its strategy to reduce content distribution to other channels.
• Others Revenue: Anticipated to drop by 48% YoY and 21% QoQ to RMB431mn.

Financial Performance

• Non-GAAP OPM (Operating Margin): Expected to contract by 9ppt YoY to -2% in 1Q26E, mainly due to lower revenue from non-core businesses.
• OCF (Operating Cash Flow): Positive at c.RMB150mn, attributed to fewer new projects in production and more efficient content review cycles.
• Cash Flow Trends: Improved in 1Q26E, with Net Cash from Operations expected to reach RMB4,718mn.

AI Progress and Strategic Initiatives

• iQiyi launched its AI agent platform, NaDou Pro, in March 2026.
• The platform leverages large models, content production expertise, and digital assets to develop over 70 agents across the full cycle of film & TV content creation.
• AI Theatre has used NaDou Pro to produce 16 titles, including films, TV series, and anime.
• Future plans include allowing content creators to use NaDou Pro for content generation and sharing revenue with them.

Valuation and Investment Outlook

• Target Price: Reduced to US$1.80, based on a 0.5x FY26E P/S (Price-to-Sales) multiple.
• Previous Target Price: US$2.00 based on a 18x FY26E non-GAAP PE (Price-to-Earnings) multiple.
• Current Price: US$1.25, with an upside of 44.0% to the target price.
• Sector Comparison: The P/S multiple is at a discount to the sector average of 4x, due to intense competition in China's video streaming industry.

Financial Summary

Revenue Trends

• FY24A: RMB29,225mn
• FY25A: RMB27,291mn
• FY26E: RMB26,248mn
• FY27E: RMB27,233mn
• FY28E: RMB28,296mn

Gross Margin

• FY24A: 24.9%
• FY25A: 21.1%
• FY26E: 20.1%
• FY27E: 22.2%
• FY28E: 23.1%

Non-GAAP Net Profit

• FY24A: RMB1,512.2mn
• FY25A: RMB280.6mn
• FY26E: RMB220.9mn
• FY27E: RMB851.9mn
• FY28E: RMB1,243.8mn

EPS (Earnings Per Share)

• FY24A: RMB1.57
• FY25A: RMB0.29
• FY26E: RMB0.23
• FY27E: RMB0.88
• FY28E: RMB1.29

Consensus EPS

• FY24A: RMB1.57
• FY25A: RMB0.29
• FY26E: RMB0.48
• FY27E: RMB0.93
• FY28E: RMB1.71

Shareholding and Stock Data

• Market Cap: US$1,205.9mn
• Average 3-Month Trading Value: US$10.2mn
• 52-Week High/Low: US$2.79/US$1.20
• Total Issued Shares: 964.8mn

Shareholding Structure

• Baidu: 45.1%
• PAG: 12.2%

Analyst Ratings and Recommendations

• CMBIGM Rating: BUY
• Reasoning: Resilient membership business and new growth opportunities such as AI and overseas markets.

Analyst Contact

• Saiyi HE, CFA: (852) 3916 1739, hesaiyi@cmbi.com.hk
• Wentao LU, CFA: luwentao@cmbi.com.hk
• Ye TAO, CFA: (852) 3850 5226, franktao@cmbi.com.hk
• Shuyin GUO: (852) 3916 3716, guoshuyin@cmbi.com.hk

Key Financial Ratios

• P/S (Price-to-Sales): 0.5x FY26E
• P/E (Price-to-Earnings): Not applicable due to non-GAAP earnings
• ROE (Return on Equity): Expected to improve to 4.2% in FY28E
• Current Ratio: Expected to be 0.5x in FY26E, improving to 0.6x in FY27E and FY28E

CMBIGM Ratings Definitions

• BUY: Stock with potential return of over 15% over next 12 months
• HOLD: Stock with potential return of +15% to -10% over next 12 months
• SELL: Stock with potential loss of over 10% over next 12 months
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark

Important Disclosures

• The information in this report is based on analyses and is not guaranteed for accuracy.
• CMBIGM does not provide individually tailored investment advice.
• Investors are encouraged to consult with a professional financial advisor.
• This report is for the use of intended recipients only and may not be reproduced or distributed without written consent.