BILIBILI(HK:09626) First Shanghai Securities·2024-07-19 04:31Investment Rating - The report assigns a "Buy" rating for the company with a target price of $20.00 or HKD 156.23, indicating a potential upside of 28.80% from the current stock price [2][6][3]. Core Insights - The company's revenue for Q1 reached RMB 5.66 billion, representing a year-on-year increase of 11.7%, slightly above market expectations. The gross margin improved to 28.3%, up 6.5 percentage points, primarily due to a higher proportion of high-margin advertising business and cost optimization [2]. - The company is expected to achieve double-digit revenue growth in the next quarter, with a slight increase in gross margin, and aims to reach breakeven in Non-GAAP operating profit by Q3 [2]. - The gaming business is anticipated to recover in the second half of the year, driven by the launch of the game "Three Kingdoms: Strategy" [2]. Financial Summary - Revenue projections for 2024-2026 are estimated at RMB 264 billion, RMB 291 billion, and RMB 309 billion, respectively, with a three-year CAGR of 11.2% [4][6]. - The company is expected to report net losses of RMB -18 million in 2024, narrowing to RMB -2 million in 2025, and achieving a profit of RMB 5 million in 2026, with net profit margins improving from -6.7% in 2024 to 1.4% in 2026 [4][6]. - The gross margin is projected to increase from 29.8% in 2024 to 32.8% in 2026, reflecting operational efficiency improvements [8]. Revenue Breakdown - The total revenue for 2022 was RMB 21.9 billion, with projections of RMB 22.5 billion in 2023, RMB 26.4 billion in 2024, RMB 29.2 billion in 2025, and RMB 30.9 billion in 2026 [5][8]. - The revenue from gaming is expected to recover, with estimates of RMB 5.2 billion in 2024 and RMB 5.6 billion in 2025 [5]. - Advertising revenue is projected to grow significantly, reaching RMB 7.96 billion in 2024 and RMB 9.29 billion in 2025 [5]. User Growth and Engagement - The company reported a 9.0% year-on-year increase in Daily Active Users (DAU) to 100 million and an 8.3% increase in Monthly Active Users (MAU) to 340 million [2]. - The number of official members grew by 15.1% year-on-year to 240 million, with paid members reaching 21.9 million [2].