Mango Excellent Media Profit Plunges 79% as AIGC Hype Meets Earnings Reality

Mango Excellent Media Profit Plunges 79% as AIGC Hype Meets Earnings Reality

TREE NEWS reports: Mango Excellent Media, one of China’s most closely watched listed companies in the AIGC film and television space, reported a steep decline in third-quarter profit, underscoring the gap between investor enthusiasm for artificial intelligence and the company’s actual financial performance.

In its third-quarter report released on October 27, the company said third-quarter revenue rose 1.87% year-on-year to 3.158 billion yuan, while net profit attributable to shareholders plunged 95.42% to just 11.55 million yuan. For the first nine months of the year, revenue grew 3.18% to 9.351 billion yuan, but net profit fell 79.01% to 213 million yuan.

The weak earnings stand in sharp contrast to the stock’s recent rally. Shares of Mango Excellent Media have climbed about 38% since mid-September, including a 20% limit-up move on October 9, as investors piled into AI film and short-drama concepts. The stock closed at 23.48 yuan on October 27.

Why the Profit Collapsed

The company attributed the profit decline to lower membership revenue, rigid content costs, and fair value changes on investment holdings.

Membership revenue fell year-on-year due to adjustments in some channel partnership models and changes in the scheduling of key dramas. For long-video platforms, membership revenue is closely tied to premium content supply, but content procurement and original production costs are rigid and cannot be cut in tandem with falling revenue.

Operating costs rose 11.8% in the first three quarters, outpacing revenue growth, pushing the gross margin down to 20.8% from about 26.9% a year earlier. Although the third-quarter gross margin improved 5.45 percentage points from the second quarter, cumulative profitability remains under pressure.

Investment losses further amplified the profit decline. The company recognized about 126 million yuan in fair value losses on investment projects and 88.31 million yuan in credit impairment losses. Total profit turned negative at 21.49 million yuan, but a 237 million yuan income tax benefit allowed the company to report positive net profit.

AIGC Story Still Unproven

The profit slump has made the search for new content production methods more urgent. Mango Excellent Media is betting on generative AI to reduce costs in production, filming, and post-production, and to produce more content with lower investment.

The company has established an AIGC Innovation Content Center and an AI Industrialization Center, leveraging its Mango large language model and Mango Lingchuang AIGC content production platform to integrate AI into the entire content planning, creation, and production process.

Its AI long-form drama “Journey to the West: After” has aired in prime time on satellite TV. The company said the project has validated a commercial pathway, marking a zero-to-one breakthrough in AI premium content. Mango TV has also launched an AIGC content label, “Lingchuang Theater,” focusing on premium female-oriented mid-to-long dramas, refreshed classic Chinese IP, and children’s animation.

However, the company has not separately disclosed revenue, profit, or production costs for its AIGC business, nor has it provided specific data on how AI is improving the overall content cost structure. Meanwhile, traditional content investment continues, with nearly 100 drama projects in reserve and inventory up 31.92% from the beginning of the year.

Market Implications

The results highlight a broader risk for investors chasing AI-themed media stocks in China: concept momentum can diverge sharply from fundamentals. While AI offers a plausible long-term solution to the cost pressures of long-video platforms, monetization remains uncertain and capital-intensive content spending continues.

For equity investors, the key question is whether Mango can translate its AIGC experiments into measurable revenue and margin improvement. Until then, the stock may remain volatile, driven more by sentiment around AI and short dramas than by earnings.

The read-through extends to other Chinese media and entertainment names that have rallied on AI narratives without clear financial contribution. Investors should watch for disclosure of AIGC revenue and cost savings in coming quarters, as well as trends in membership revenue and content spending.

Key Takeaways

• Mango Excellent Media’s third-quarter net profit fell 95% year-on-year, and first-nine-month profit dropped 79%, despite slight revenue growth.
• Rising content costs and lower membership revenue squeezed margins, while investment fair value losses and credit impairments further hurt results.
• The company is positioning AIGC as a second content supply curve, but has not yet disclosed quantifiable revenue or cost benefits.
• Investors should distinguish between AI concept momentum and actual earnings delivery; near-term stock moves may remain sentiment-driven.