CICC International: Raised target price for Yuewen Group to HK$39, maintained expectation for stable annual income from online business.

Industrial and Commercial Bank of China International released a report stating that in the first half of the year, the revenue of Yuewen Group fell by 24% to 3.2 billion yuan, which is generally in line with market expectations. Excluding Xinli Media, the adjusted net profit was 550 million yuan, an increase of 36% year-on-year, with a corresponding adjusted net profit margin of 17%, in line with expectations. Online business revenue increased slightly by 2% year-on-year, with a 5% year-on-year increase in paid users to 9.2 million. Copyright operation revenue decreased by 46% year-on-year, mainly due to the delayed launch of Xinli drama series and the confirmation of net income from Hongguo's cooperation on short dramas. The growing trend of IP derivatives continued, with a turnover of 480 million yuan in the first half of the year, close to the full-year level of 2024. The bank maintains its expectation of stable annual revenue in Yuewen's online business and predicts a 15% year-on-year decline in copyright operation revenue, with the core IP operation revenue of Yuewen increasing by 4% year-on-year, benefiting from the expansion of IP derivative business categories. The target price has been raised from 28 Hong Kong dollars to 39 Hong Kong dollars, and the rating has been upgraded to "buy."