行内第三季度报告业绩；预计2025年第四季度收入和利润率将回升

margin recovery in 4Q25E Inline 3Q25 results;expect revenue and marginrecovery in 4Q25E Target PriceUS$2.65(Previous TPUS$2.70)Up/Downside21.6%Current PriceUS$2.18 iQiyi reported 3Q25 results: total revenue declined by 8% YoY to RMB6.68bn,in line with consensus/our estimate; non-GAAP net loss was RMB148mn, downfromnet income of RMB480mn in 3Q24 due to content investment andoperating deleverage, also in line with consensus/our estimate. For4Q25E, weexpect total revenue to recover by 2% YoY and 1% QoQ, mainly driven by therecovery ofmembership business on a better content pipeline and policysupport. Innovativebusinessessuch as microdramasand overseas businessesalso started to bear fruit. We lower our FY25-27E non-GAAP operating profitforecastto RMB0.55/1.61/1.89bn(previous:RMB0.67/1.63/1.91bn),mainly China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Expect membershipbusiness to recover YoYin4Q25E.Membershipservices revenue declined by 4% YoY but grew by 3% QoQ to RMB4.21bnin 3Q25. The QoQ recovery was mainly due to the solid performance ofcertain populardramatitles such asThe ThrivingLand,which topped 2025Enlightentdata chart for peak daily market share.Online advertisingrevenue was down by 7% YoY and 3% QoQ to RMB1.24bn in 3Q25,primarilyattributable to decrease in performance-based ad revenue.Content distribution revenue declined by 21% YoY RMB645mn in 3Q25,within which the solid growth ofdistribution revenue related tomovies was Ye TAO, CFAfranktao@cmbi.com.hk Joanna Ma(852) 3761 8838joannama@cmbi.com.hk Positive progress in overseas market, microdramas and AI.Thecompanymade solid progress in the overseas market.Overseasmembership revenue grew by over 40% YoY in 3Q25, withmembershiprevenuefrom markets like Brazil, Mexico and Indonesiamore than doubledYoY. On themicrodrama front, the company now has over 20,000 micro-drama titles with overahalfavailable for free.The company also introduced Expect margin to bottom out.Non-GAAP OPM decreased by 5ppt YoY to-0.3% in 3Q25, mainly due tocontentinvestment and operating deleverage.WeexpectOPM to recover in 4Q25 and 2026E, driven by the recovery ofmembership business.Management notedthat the National Radio and Source: FactSet Business forecasts update and valuation Valuation We valueiQiyiat US$2.65perADSbased on18x2026E non-GAAP EPS.Our target PEmultiple isat adiscountto thesector average (29x), due to the intense competition in Disclosures& Disclaimers Analyst Certification The research analyst who is primary responsible for the content of this research report, in whole or in part, certifiesthat with respect to the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is,or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securitiesand Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business daysafter the date of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM Ratings BUY: Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important Disclosures There are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGMdoes not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.The value of, and returns from, any investments are u