Mango Excellent Media's advertising resilience offsets part of the pressure, but weakening membership trends lead UBS to maintain a neutral rating

Overview

UBS issued an earnings review on Mango Excellent Media (300413.SZ), with the core view that advertising remains resilient under macro weakness and structural pressure in long-form video, while membership trends are clearly weakening, and margins in the short term are still weighed down by content and technology spending. UBS maintains a Neutral rating and lowers the DCF target price from Rmb29.40 to Rmb21.00.

Core views

UBS believes Mango had previously achieved subscription growth better than long-video peers by relying on channel partnerships and content diversification, but with a larger subscriber base, diminishing channel customer acquisition tails, and structural diversion toward short-drama and other online entertainment formats, the membership growth model is normalizing. Advertising revenue, supported by top-tier variety IPs and hit series, performs better than the subscription business, while e-commerce and overseas businesses also show early positive signs. However, short-term profit recovery is still constrained by pressure on gross margin and operating margin, and the current estimated 34x 2026 P/E is broadly fair relative to the roughly 17% 2026-2028 EPS CAGR.

Analysis framework

The report assesses the company’s fundamentals and valuation by combining Q4 2025 and Q1 2026 actual results, Visible Alpha consensus expectations, UBS forecast revisions, DCF valuation, and scenario price ranges. It focuses on decomposing changes in subscriptions, advertising, e-commerce, content costs, gross margin, operating margin, and net margin, and compares these with A-share media peer valuations.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  UBS derives the target price using DCF, with key assumptions including WACC of 7.8%, a 10-year mid-cycle growth period, terminal growth rate of 2.5%, mid-cycle ROIC of 15.0%, and terminal ROIC of 9.0%.

• Earnings forecastUBS revised earnings forecast

  Revisions to revenue, gross margin, operating margin, and EPS forecasts

  The report lowers assumptions for subscription revenue and margins while raising advertising and e-commerce revenue growth forecasts; overall it cuts the 2026 net profit forecast by 20% and trims the 2026-2028 EPS forecast by 18%-21%.

• Scenario analysisUpside/Downside Spectrum

  Upside, base, and downside scenario price ranges

  The base-case target price is Rmb21.00, the upside case is Rmb32.00, and the downside case is Rmb11.00, with key variables including advertising revenue growth, e-commerce/content-related revenue growth, subscriber count, and 2026 net margin.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Mango Excellent Media (300413.SZ)

  Research coverage

  Strengths

  Strong variety IPs, relatively resilient ad monetization, and early progress in e-commerce and overseas businesses.

  Weaknesses

  Membership revenue turning negative, subscriber growth decelerating, ARPPU declining, and content and technology spending depressing margins.

  Comparison

  Valuation is about 34x 2026e P/E, broadly consistent with the three-year average and average valuations of A-share media peers.

  Risks

  Uncertainty in content performance, regulation, competition from short-video and other long-video platforms, and macro volatility in advertising budgets.

• Mango TV

  Core long-video platform business

  Strengths

  Top-tier variety IPs and series acquisition support advertising revenue.

  Weaknesses

  Subscription growth has reached a bottleneck, with margin pressure from declining marginal returns from short dramas and channel acquisition.

  Comparison

  Subscription growth previously outperformed long-video peers, but the growth pattern is normalizing.

  Risks

  Subscription users and ARPPU continuing to miss expectations, with rising content costs.

• Xiaomang e-commerce

  E-commerce and media synergy business

  Strengths

  GMV was Rmb18.6bn in 2025 and it achieved its first full-year profit.

  Weaknesses

  E-commerce gross margin and scale quality still need ongoing validation.

  Comparison

  Compared with the subscription business, e-commerce forecasts were raised and provide some fundamental cushion.

  Risks

  Regulatory changes, competition, and conversion efficiency uncertainties in e-commerce and live-stream e-commerce.

Key data

• RatingNeutralThe 12-month rating remains neutral.
• Target priceRmb21.00Reduced from Rmb29.40 based on DCF valuation.
• Current priceRmb20.22The scenario chart shows the price around May 8.
• H2 2025 subscription revenueDown 19%Weaker subscription trends were a major reason the earnings missed expectations.
• Subscription user growth by end-2025Up 3%UBS expects about 78 million subscribers by the end of 2026.
• 2025 ARPPUDown 15%Channel expansion strategy and the subscription growth bottleneck are suppressing per-user revenue.
• H2 2025 advertising revenueUp 31%Reached the highest level since 2022.
• 2026 advertising revenue forecastUp 4%UBS expects advertising growth momentum to continue through Q1 2026.
• 2026 net profit forecast revisionDown 20%Reflects ongoing pressure on gross margin and operating margin.
• 2026-2028 EPS forecast revisionDown 18%-21%New EPS forecasts for 2026/2027/2028 are Rmb0.60, Rmb0.71, and Rmb0.82 respectively.
• 2026 estimated P/E34xGenerally consistent with the three-year historical average and the average of A-share media peers.
• 2026-2028 EPS CAGR17%Used to evaluate whether current valuation is reasonable.

Impact & implications

The report’s assessment of investment implications is balanced: the stock has fallen about 26% over the past three months and most fundamental weakness has already been absorbed; however, until clearer catalysts emerge such as a rebound in subscription growth, stronger flagship variety or series performance, the long-term impact of AIGC on content production efficiency, and further easing of long-video regulation, risk-reward is insufficient to support a more constructive rating.

Risks

• Tighter regulation of video content and streaming platforms.
• Adverse regulatory changes in the e-commerce and live-streaming commerce sectors.
• Intensified competition from other long-video platforms, short-video platforms, and other entertainment formats.
• Weak macro conditions affecting advertising demand and advertiser budgets.
• Uncertainty in content quality, content innovation, and production costs.
• Core talent retention risk.
• Subscription user growth and ARPPU may continue to lag expectations.

What to watch

• Whether top-tier variety and series performance can improve subscription growth and ad monetization.
• Whether subscription revenue, subscriber count, and ARPPU stabilize in 2026.
• Whether advertising revenue growth can sustain the resilience seen since Q1 2026.
• Whether pressure from content and technology investments on GPM, OPM, and net margin eases.
• Progress in applying AIGC in content production and its long-term impact on PGC content supply.
• Whether long-video industry regulation sees further easing.
• Whether Xiaomang e-commerce profitability and synergy with media business continue to improve.