20250721-招银国际-2Q25E_preview_total_revenue_under_pressure_but_earnings_outlook_intact_5页_1012kb

iQiyi (IQ US) Equity Research Update

Key Forecast Adjustments (2Q25E & Future Years)

• Total revenue expected to decline YoY/QoQ due to delays in TV dramas and weaker ad performance, leading to a slight revision in FY25-27E revenue outlook (-1-2%).
• Non-GAAP operating profit for 2Q25E revised downward to RMB26mn, but in line with initial expectations given cost controls.
• Target price lowered from US$2.45 to US$2.25 (13x non-GAAP EPS for 3Q25E-2Q26E).

Business Highlights

• Membership: Revenue expected to drop 9%/7% YoY/QoQ due to delayed dramas, but supported by upcoming Q3 releases.
• Advertising: Online ad revenue projected to decline 13%/4% YoY/QoQ due to weak performance-based ads despite growth in brand ads.
• Content Distribution: Revenue set to decrease 30% QoQ primarily from reduced barter transactions.

Strategic Initiatives

• Continued investment in mini-dramas, recent success shown by self-produced titles.
• Maintaining prudent control on content costs while investing in mini-dramas, expected to improve ecosystem but take time to generate meaningful revenue.
• OPM Pressure: Sequential deleverage expected, non-GAAP OPM projected to fall to 0.4% in 2Q25E due to operating investments alongside cost controls.

Valuation

• Maintain BUY recommendation.
• Target PE lower than sector average (33x) reflecting competitive landscape.
• Target price based on 13x non-GAAP EPS outlook.

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**Note:** This summary reflects key highlights and major changes/predictions from the provided analysis, covering business outlook, forecasts, recommendations, and valuation. For detailed performance metrics or financial statements, refer to the original report.