BILIBILI(09626) 长城证券·2024-07-17 06:31Investment Rating - The report initiates coverage on Bilibili-W (09626 HK) with a "Buy" rating [2] Core Views - Bilibili's content and user ecosystem are thriving, driving accelerated commercialization and significantly improved profitability visibility [2] - The company is expected to achieve adjusted operating profit breakeven by Q3 2024 and start generating profits [4][6] - Revenue is projected to grow from RMB 26 993 million in 2024E to RMB 33 992 million in 2026E, with adjusted net profit turning positive in 2025 [3][4] Financial Performance - Revenue grew 2 9% YoY in 2023 to RMB 22 528 million, with 19 8% growth expected in 2024 [3] - Net loss narrowed from RMB 7 497 million in 2022 to RMB 4 822 million in 2023, with further improvement expected [3] - ROE improved from -49 2% in 2022 to -33 5% in 2023, projected to turn positive in 2025 [3] Content Ecosystem - Bilibili has built a robust content ecosystem through its "OGV+PUGV" dual-strategy, achieving high user retention [3] - The platform has expanded from ACG content to broader entertainment and knowledge categories, with 41% of content being knowledge-related as of March 2023 [11] - Daily active UP creators increased 24% YoY in 2023, with monthly submissions reaching 21 5 million [36] Commercialization Progress - Value-added services (including live streaming and membership) grew 17% YoY in Q1 2024, becoming the largest revenue contributor [21] - Advertising revenue increased 26 56% YoY in 2023, driven by effective ad infrastructure optimization [22] - Game business is expected to rebound in 2024 with new product cycles, including "Three Kingdoms: Strategic World" [4][22] User Growth - DAU reached 102 million in Q1 2024, with DAU/MAU ratio improving to 30% [57] - User retention remains strong at over 80% for 12 months [58] - The platform continues to expand beyond its core Z-generation user base, attracting older demographics [59] Cost Efficiency - Sales and marketing expenses decreased 20% YoY in 2023, while maintaining user growth [25] - Gross margin improved from 15 04% in Q2 2022 to 28 33% in Q1 2024 [24] - Operating cash flow turned positive in 2023, reaching RMB 267 million [27] Future Outlook - The company aims to double its mobile DAU from current levels [57] - Story Mode is expected to drive further user engagement and advertising revenue growth [44][52] - Game business is projected to return to growth in Q3 2024 with new product launches [22]