BILIBILI(BILI) 招银国际·2024-07-15 01:31Investment Rating - The report maintains a Buy rating for Bilibili (BILI US) with a target price of 16.71 [1][3] Core Views - Bilibili's community ecosystem and commercialization are showing healthy growth, with user stickiness and commercial value improving due to the expansion of diversified content categories such as knowledge and consumer-related content [1] - The company's commercial infrastructure has been enhanced, leading to a 50% YoY increase in the number of advertisers and a 100% YoY growth in GMV from live-streaming e-commerce in 1H24 [1] - The gaming business has entered its third "five-year plan," focusing on both self-developed and agency games, with plans to launch at least two new long-term vertical games in the next five years [1] - The short-term catalyst for the stock is the better-than-expected performance of the mobile game San Mou, while the long-term outlook is positive due to the company's improving commercialization capabilities and profitability [1] Content Ecosystem - Bilibili has expanded its content categories beyond traditional strengths, with knowledge and consumer-related content growing rapidly, contributing to a 5 percentage point increase in the share of diversified content video views [1][7] - In 1H24, video views (VV) for automotive/travel/home improvement categories grew by 48%/40%/43% YoY, respectively, driving higher creator revenue and user spending on the platform [1][7] - Creator revenue increased by 32% YoY in 1H24, with income from Hua Huo orders/charging/classroom projects growing by 31%/371%/52% YoY, respectively [7] - The number of users with spending behavior on the platform grew by 71% YoY in 1H24 [7] Commercialization Infrastructure - Bilibili has improved its advertising infrastructure through: 1) enhanced ad distribution by optimizing user experience and ad load rates, 2) better ad creatives using AIGC technology, 3) integrated ad tools like Bi Huo Mobile, which saw 300% YoY growth in ad revenue in 1H24, and 4) improved data insights for advertisers via B-Data and Z-Index [1][8] - The number of advertisers on the platform increased by 50% YoY in 1H24, with game industry ad revenue growing over 30% YoY and internet services/education/finance ad revenue growing over 100% YoY [8] - During the 618 shopping festival, platform GMV grew by 146% YoY, and ad revenue increased by over 30% YoY, with new customer acquisition rates exceeding 50% for e-commerce platforms [8] Gaming Business - The success of San Mou is attributed to its differentiated positioning, reduced user burden (shorter playtime and lower in-game item prices), and innovative content tailored for young users [9] - Bilibili's gaming strategy focuses on: 1) developing games that appeal to young users, 2) a dual approach of self-development and agency, 3) maintaining leadership in content-driven games, and 4) launching at least two new long-term vertical games in the next five years [1][9] - The company expects the gaming business to become a major profit driver in the long term, supported by the long lifecycle of SLG games and the team's commitment to user experience and content quality [9] Financial Performance - Revenue is expected to grow from RMB 25.5 billion in FY24E to RMB 29.3 billion in FY26E, with gross margins improving from 30.0% in FY24E to 34.3% in FY26E [2] - Adjusted net profit is projected to turn positive in FY25E at RMB 1.16 billion, increasing to RMB 1.44 billion in FY26E [2] - The company's P/S ratio is expected to decline from 2.0x in FY24E to 1.7x in FY26E, reflecting improving profitability [2] Valuation and Market Performance - Bilibili's stock has shown strong performance, with 1-month/3-month/6-month absolute returns of 16.1%/45.6%/56.9%, outperforming the market in relative terms [5] - The company's market cap stands at 19.07/$8.94 [4]