iQIYI plans Hong Kong listing, first-ever buyback, and testing of a long-form video generation AI Agent

Overview

This report focuses on iQIYI's proposed Hong Kong listing, its first share buyback, and the commercial testing of the Nadou Pro AI Agent for long-form video generation. Goldman Sachs believes these actions have positive implications for the investor base, capital returns, and content production efficiency, but it maintains an overall Neutral view because listing approval, final terms, and the buyback execution pace remain unclear.

Core views

The core views are: first, a Hong Kong listing could expand investor coverage and potential financing capacity; second, a buyback of up to US$100mn represents a meaningful scale relative to the current market capitalization and should help signal shareholder return commitment to the market; third, if the AI Agent can be effectively applied to complex virtual scenes and visual effects, it may improve long-form video production costs and efficiency; and fourth, the company still faces uncertainties around competition, content ROI, regulation, and advertiser acquisition capability.

Analysis framework

The report evaluates the investment implications of the announcement by combining event interpretation, valuation framework, financial forecasts, share performance, balance sheet strength, and cash flow capacity. Valuation uses the 2026-2027E average P/E multiple, supplemented by GS Factor Profile, M&A Rank, and comparable coverage set analysis.

Methodology notes

• Valuation methodsP/E-based target price

  P/E-based target price

  Goldman Sachs uses a 12-month P/E-based target price for iQIYI, derived from 13x the 2026-2027E average P/E, resulting in a target price of US$1.80.

• factor_profileGS Factor Profile

  growth, financial returns, valuation multiples, and composite factor comparison

  GS Factor Profile compares individual stocks with the market and industry peers across growth, financial returns, valuation multiples, and composite percentiles, providing investment context.

• m_and_aM&A Rank

  M&A potential score

  M&A Rank measures the probability of a company becoming an acquisition target on a scale of 1 to 3; iQIYI's M&A Rank is 3, indicating a low probability, and it is not included in the target price.

• databaseQuantum

  Goldman Sachs proprietary financial database

  Quantum is used to access historical financial statements, forecasts, and ratios, and can support single-company analysis as well as cross-industry and cross-market comparisons.

Asset mapping & comparison

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

• iQIYI Inc. (IQ.US)

  core coverage name

  Strengths

  It has long-form video content production experience, self-developed Qi-Zhi LLM, and integration with multiple video generation models; the proposed Hong Kong listing and buyback could improve the capital market narrative; and the cash balance is believed to support the buyback and subsequent debt arrangements.

  Weaknesses

  The stock has pulled back sharply since the start of the year; FY25 free cash flow was only Rmb10mn / US$1.4mn; and profitability and growth are still in the recovery phase.

  Comparison

  The report compares IQ with the China Games, Entertainment & Healthcare Tech coverage group and shows that its 3-month, 6-month, and 12-month share-price performance versus the S&P 500 is negative.

  Risks

  Intensifying competition, weaker-than-expected content cost ROI, regulatory risks, insufficient advertiser retention and acquisition capability, and uncertainty around the buyback pace.

Key data

• RatingNeutralThe report maintains a Neutral rating on iQIYI.
• 12-month target priceUS$1.80Based on 13x the 2026-2027E average P/E.
• Current priceUS$1.27Price shown in the report table.
• Implied upside41.7%Calculated from the target price and current price.
• Market capitalizationUS$1.2bnShown in the report's key data.
• Enterprise valueUS$2.2bnShown in the report's key data.
• 3-month average daily turnoverUS$18.2mnShown in the report's key data.
• Planned buyback sizeUp to US$100mnTo be executed over the next 18 months, equivalent to about 9% of market cap at the time of the report.
• FY25 cash and cash equivalentsRmb4.3bn / US$630mnThe report believes this is sufficient to support the buyback and the next convertible bond payment.
• 2026E EPSRmb0.69Shown in the GS forecast table.
• 2027E EPSRmb1.32Shown in the GS forecast table.
• 2028E EPSRmb2.32Shown in the GS forecast table.

Impact & implications

For investors, the announcement package is mildly positive: a Hong Kong listing could broaden capital market coverage, the buyback may ease sentiment after the notable share-price pullback since the start of the year, and the AI Agent commercialization test offers a potential catalyst for improved content production efficiency. However, the Neutral rating reflects that these positives still need to be validated through approval, buyback execution, and actual cost savings from the AI tool.

Risks

• The Hong Kong listing still requires HKEX approval, completion of the CSRC filing, and the company's final decision, and the terms have not yet been finalized.
• Although the share buyback is sizable, the execution pace and actual market-support effect still need to be observed.
• The cost-reduction effect of the long-form video AI Agent's commercialization still needs to be validated through real projects.
• Industry competition, content execution, and content cost ROI may affect profitability recovery.
• Regulatory risks may affect the business and capital market arrangements.
• If advertiser retention and acquisition are weaker than expected, revenue and profit may be dragged down.

What to watch

• Progress, key terms, and timetable of the Hong Kong listing application.
• The actual execution speed, price range, and liquidity impact of the US$100mn buyback plan.
• Commercial cases, cost savings, and production quality of the Nadou Pro AI Agent in long-form video production.
• Trends in membership, ARPPU, advertising, and content costs.
• Changes in 2026E-2028E EPS, free cash flow, and net debt.
• The competitive environment, regulatory policy, and changes in advertiser demand.