BILIBILI(BILI) 光大证券·2024-09-24 02:12Investment Rating - Maintain "Overweight" rating [1] Core Views - Bilibili's self-published SLG mobile game "Three Kingdoms: Strategic Conquest" (referred to as "Three Kingdoms") has shown strong performance, reaching No 2 on the iOS bestseller list shortly after its S3 season launch on September 21 [1] - The game is expected to become a long-term revenue driver, with iOS revenue estimated at $825 million as of September 22 [1] - Bilibili's 2Q24 total revenue reached RMB 6 13 billion (YoY +16%), with game revenue contributing RMB 1 01 billion (YoY +13%) [1] - Advertising revenue grew 30% YoY to RMB 2 04 billion in 2Q24, driven by e-commerce and digital home appliances sectors [1] - The company is expected to achieve operating profitability in 3Q24, with adjusted operating profit forecasted at RMB 180-200 million [1] Business Performance Game Business - "Three Kingdoms" set a record as Bilibili's fastest game to reach RMB 1 billion in revenue [1] - The game maintained its position as the top-grossing SLG game in China's iOS market since its public launch on June 13 [1] - Bilibili ranked 8th in China's mobile game publisher global revenue ranking in August 2024, up 4 places from the previous month [1] - Future pipeline includes global version of "Jujutsu Kaisen Phantom Parade" with a target of 10 million pre-registrations, scheduled for December 5, 2024 [1] Financial Performance - 2Q24 gross margin improved by 6 8 percentage points to 29 9% [1] - Adjusted operating loss narrowed by 69% YoY to RMB 284 million [1] - Adjusted net loss narrowed by 72% YoY to RMB 271 million [1] - Deferred revenue increased by RMB 738 million from the end of March to June [1] Future Outlook - 3Q24 game revenue is expected to achieve high double-digit growth [1] - Advertising revenue is projected to maintain 25-30% growth in 3Q24 [1] - VAS business is forecasted to grow approximately 10% in 3Q24 [1] - The company is expected to achieve 15-20% operating margin in the medium term [1] Valuation and Forecast - Revenue forecasts for 2024-2026 are maintained at RMB 26 7/29 7/31 9 billion [1] - Net profit forecasts for 2024-2026 are revised to -1 26/0 27/1 66 billion RMB (vs previous -1 48/0 18/1 55 billion) [1]