- Maggio 9, 2023
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
Next up on our list of Goldman’s China picks is iQiyi, the largest online streaming service in China. iQiyi was founded more than a decade ago, by Baidu and now has a leading market share in China’s video-on-demand.
Through its platform, the company provides a wide range of video programming to the Chinese market, including reruns of existing programming and in-house production. iQiyi has more than 50 production studios, and has developed stand-along and serialized original programming. The company follows a subscription for service model, selling access to its library of on-demand video.
Viewers can choose from ad-supported or VIP subscription services, and thematic choices range from drama serials, to old and new movies, to variety shows, to anime. The company offers localized language options, and subtitles, to make viewing, and has a daily subscriber base more than 100 million strong.
On the financial side, iQiyi turned from quarterly net losses to net profits from 2021 to 2022. In the last reported quarter, Q4 2022, iQiyi showed a quarterly profit of 14 cents according to non-GAAP measures. This was a tremendous turnaround from the 32-cent loss in Q4 2021 and beat estimates by 7 cents.
The profits were derived from a top line of $1.1 billion, which was down 8% y/y but $10 million ahead of the forecast. The company’s performance benefited from strong subscriber growth, which expanded from 97 million daily subscribers in 4Q21 to 101.01 million in 3Q22 to 111.6 million in 4Q22. The company will report its 1Q23 results on May 16.
Turning to the Goldman view, we find that analyst Lincoln Kong is upbeat on iQiyi’s prospects. He writes: “We believe 2023 remains the year for IQ to regain market share with accelerating revenue and sustained profitable growth… [We] expect IQ to deliver above-peers revenue growth in an industry with improving competition dynamics, and is set to see accelerating fundamentals off a low base (for both time spent and subscription) starting June-July.”
These comments support Kong’s Buy rating on the stock, and his price target of $10 points toward a 65% upside for the coming year.uy consensus rating. The shares have a $9.41 average price target, indicating ~56% upside potential from the $6.05 selling price.
