2024-08-28 03:37Investment Rating - The report assigns a "Buy" rating to Bilibili (BILI US) with a target price of $19.00, indicating a potential upside of 46.6% from the current price of $12.96 [17]. Core Insights - Bilibili's Q2 2024 revenue reached 6.1 billion RMB, reflecting a year-over-year growth of 16% and a quarter-over-quarter growth of 8%, with a narrower adjusted net loss of 270 million RMB, which is better than the expected loss of 330 million RMB [1][12]. - The company is expected to achieve operational profitability in Q3 2024, driven by new game launches and improved revenue structure, leading to a projected adjusted operating profit of 220 million RMB [1][12]. - Advertising revenue grew by 30% year-over-year in Q2 2024, benefiting from increased traffic and enhanced advertising efficiency, with a notable 50% increase in the number of effective KA advertisers [1][12]. Financial Overview - Revenue projections for Bilibili are as follows: 26.5 billion RMB in 2024E, 29.0 billion RMB in 2025E, and 30.9 billion RMB in 2026E, with corresponding year-over-year growth rates of 17.6%, 9.3%, and 6.6% respectively [4][18]. - The adjusted net profit is expected to improve significantly, with projections of a loss of 136 million RMB in 2024E, followed by a profit of 1.2 billion RMB in 2025E and 2.4 billion RMB in 2026E [4][18]. - The gross margin is anticipated to increase to 34% in Q3 2024, up from 30% in Q2 2024, driven by high-margin business growth [1][12]. User Engagement Metrics - Total user time increased by 11% year-over-year in Q2 2024, with daily average video views rising by 18% [7][8]. - The number of users engaging with transaction content reached nearly 40 million, marking a 70% increase year-over-year, indicating strong user engagement and monetization potential [1][12].