External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>We estimate iQIYI could deliver an upbeat margin but mild rev growth in 4Q23E, with better-than-feared ads revenue and rising ARM (despite subs volatility).</li><li>We suggest looking beyond the high base for 1Q24E, and focusing on upcoming rich content in its 2024 pipeline, including San Ke Shu (南来北往), Fox Spirit Matchmaker (狐妖小红娘) and Gu Zhou (孤舟). ARM expansion should support its earnings growth and solid free cash flow in FY24E.</li><li>We are also positive on its margin improvement on higher ROI in content investments. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We estimate iQIYI could deliver an upbeat margin but mild rev growth in 4Q23E, with better-than-feared ads revenue and rising ARM (despite subs volatility).We suggest looking beyond the high base for 1Q24E, and focusing on upcoming rich content in its 2024 pipeline, including San Ke Shu (南来北往), Fox Spirit Matchmaker (狐妖小红娘) and Gu Zhou (孤舟). ARM expansion should support its earnings growth and solid free cash flow in FY24E.We are also positive on its margin improvement on higher ROI in content investments. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

IQIYI (IQ US) – Margin Intact with Continued ARM Expansion

<ul><li>iQIYI (IQ) delivered solid 3Q23 results with in-line revenue and upbeat earnings.</li><li>Looking into 4Q23E, we forecast revenue +4% YoY, in which subs/ads +5%/0% YoY.</li><li>We are positive on its average revenue per membership (ARM) (+3% QoQ in 4Q23E) and expect newly-launched top dramas (e.g. Story of Kunning Palace 宁安如梦) to support subs stability. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

iQIYI (IQ) delivered solid 3Q23 results with in-line revenue and upbeat earnings.Looking into 4Q23E, we forecast revenue +4% YoY, in which subs/ads +5%/0% YoY.We are positive on its average revenue per membership (ARM) (+3% QoQ in 4Q23E) and expect newly-launched top dramas (e.g. Story of Kunning Palace 宁安如梦) to support subs stability. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

IQIYI (IQ US) – ARM Expansion to Unlock Subs LTV

<ul><li>Despite soft season and content delay, IQ still delivered solid 2Q23 results with in-line topline and upbeat margin.</li><li>Market concern may lie on its low subs retention and limited visibility on 2H23E subs net adds, but we believe its rich, high-quality and exclusive content would support long-term subs value.</li><li>We forecast 3Q23E rev +8% YoY (in which subs/ads +20%/37% YoY), with adj. OP at RMB815mn. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Despite soft season and content delay, IQ still delivered solid 2Q23 results with in-line topline and upbeat margin.Market concern may lie on its low subs retention and limited visibility on 2H23E subs net adds, but we believe its rich, high-quality and exclusive content would support long-term subs value.We forecast 3Q23E rev +8% YoY (in which subs/ads +20%/37% YoY), with adj. OP at RMB815mn. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

iQIYI (IQ US) – Prioritizing on long-term subs value

<ul><li>Despite soft season and content delay, we expect IQ to deliver in-line 2Q23E, with rev +17% YoY (subs/ads +15%/25% YoY) and adj.</li><li>OP at RMB783mn (OPM at 10%). IQ outperformed than peers in Jun &amp; Jul, backed by popularity of Destined &lt;长风渡&gt; (viewership mkt share at 20%-30%).</li><li>After subs sequential decline in 2Q23E, we expect strong summer content to boost 3Q23E momentum (e.g. upcoming Mysterious Lotus Casebook). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Despite soft season and content delay, we expect IQ to deliver in-line 2Q23E, with rev +17% YoY (subs/ads +15%/25% YoY) and adj.OP at RMB783mn (OPM at 10%). IQ outperformed than peers in Jun &amp; Jul, backed by popularity of Destined &lt;长风渡&gt; (viewership mkt share at 20%-30%).After subs sequential decline in 2Q23E, we expect strong summer content to boost 3Q23E momentum (e.g. upcoming Mysterious Lotus Casebook). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

IQIYI (IQ US) – Moving into 3Q23E Strong Pipeline

Thematic (Sector/Industry)

<ul><li>Although geographical tension and macro challenges are yet over, we believe most worst-case scenarios have been priced in.</li><li>Jun would be good timing to accumulate some defensive &amp; undervalued names over a 12-month horizon, as we expect sector sentiment will be moderately boosted by: 1) 2Q23E acceleration with low base; 2) upcoming strong drama &amp; game pipeline in summer holiday; 3) solid performance for 618 promotions;; and 4) potential positive economic incentives.</li><li>We prefer SFV&amp;LFV and game subsectors, for resilience on macro uncertainty, stable competition landscape, and better margin outlook with solid growth. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Although geographical tension and macro challenges are yet over, we believe most worst-case scenarios have been priced in.Jun would be good timing to accumulate some defensive &amp; undervalued names over a 12-month horizon, as we expect sector sentiment will be moderately boosted by: 1) 2Q23E acceleration with low base; 2) upcoming strong drama &amp; game pipeline in summer holiday; 3) solid performance for 618 promotions;; and 4) potential positive economic incentives.We prefer SFV&amp;LFV and game subsectors, for resilience on macro uncertainty, stable competition landscape, and better margin outlook with solid growth. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Entertainment – Embracing rich pipeline and sector mild re-rating

China

iQIYI, Inc. offers video entertainment services. The Company provides movies, television dramas, variety shows, and other video contents. iQIYI offers services worldwide.

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iQIYI Inc (IQ US)

IQIYI (IQ US) – Margin Intact with Continued ARM Expansion

We estimate iQIYI could deliver an upbeat margin but mild rev growth in 4Q23E, with better-than-feared ads revenue and rising ARM (despite subs...

CMB International

IQIYI (IQ US) – ARM Expansion to Unlock Subs LTV

iQIYI (IQ) delivered solid 3Q23 results with in-line revenue and upbeat earnings. Looking into 4Q23E, we forecast revenue +4% YoY, in which subs...

CMB International

iQIYI (IQ US) – Prioritizing on long-term subs value

Market concern may lie on its low subs retention and limited visibility on 2H23E subs net adds, but we believe its rich, high-quality and exclusive...

CMB International

IQIYI (IQ US) – Moving into 3Q23E Strong Pipeline

Despite soft season and content delay, we expect IQ to deliver in-line 2Q23E, with rev +17% YoY (subs/ads +15%/25% YoY) and adj.

CMB International

China Entertainment – Embracing rich pipeline and sector mild re-rating

Although geographical tension and macro challenges are yet over, we believe most worst-case scenarios have been priced in.

CMB International

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