iQIYI (IQ) Investor Day: Industrialization of sharing content production, AIGC improves the efficiency of long video production

iQIYI held an investor day event in Beijing on 3.31, and the management shared its insights on business and content prospects in fields such as production and AIGC. (1) Various business prospects, mature business members + advertising. Each report has its focus. The membership business focuses on increasing the income of members. Membership will be considered at different stages—the balance between data growth and ARPU improvement. In terms of advertising structure, the proportion of effective advertising has increased. Brand advertising was significantly affected by the epidemic in 2022, and there was an inevitable recovery in the first quarter of 2023, but it remained cautiously optimistic. iQIYI Express Edition and Suime are in the growth stage of running through the model. Overseas and electricity businesses, such as paying for a single movie, are still exploratory. (2) Promote the industrialization of film and television. iQiyi structure An efficient content management middle-end system has been built. The entire cycle of project production has been digitally managed effectively to improve the efficiency of content production and review. There will still be digital and AI evaluation in the future Room to level up. (3) Content strategy: the company insists on diversified creation and 50+ studios. The combination stimulates creativity and encourages the growth of newcomers; from the perspective of external cooperation, continue to respect artists and encourage newcomers. Sharp inclusive and win-win strategy. (4) AIGC can improve efficiency in the field of a long video. Current AI AccelerationThe role is to help iQIYI improve the efficiency of creative screening in the planning stage and the generation of content creators. Regarding empowerment, AI generates titles and Weibo topics in the announcement stage to improve efficiency.

Profit Forecast and Investment Suggestion: The core membership business is stable, and the primary membership model of the speed version is running. Explore business increments such as overseas and movie single-film payment. The company continues to develop in the field of content production industrialization. Sophistication, improve creative efficiency through the digital middle platform, and maintain inclusiveness and harmony in stimulating content creativity. Diversity, there are 50+ studios for long-term incubation, and external cooperation insists on cooperating with artists and cutting-edge.

Win and create together. We maintain the 2023-24 revenue forecast of 32.7 billion yuan and 36.3 billion yuan, a year-on-year increase13%, 11%. The NonGAAP net profit attributable to the parent in 2023-24 is estimated to be 2.57 billion yuan and 3.60 billion yuan. Concerning the valuation of comparable companies, iQiyi’s 23-year profit corresponds to a 26xPE valuation. The reasonable value of the company is 10.27 US dollars / ADS, maintaining a "buy" rating.

Risk warning: the recovery of advertising is not as expected, the risk of membership is lower than expected, the competition pattern is deteriorating, etc.