BILIBILI(US:BILI) Goldman Sachs·2025-05-26 05:36Investment Rating - The report maintains a "Buy" rating for Bilibili Inc. (BILI) with a 12-month price target of $23.60, representing an upside of 24.6% from the current price of $18.94 [1][12]. Core Insights - The report highlights a better-than-industry advertising growth and an improved gaming outlook, which are expected to drive margin expansion for Bilibili [1][4]. - The gaming segment is anticipated to benefit from the resumption of the Pretty Derby game and the upcoming Sanguo NSLG anniversary, which could enhance user engagement and revenue [2][24]. - Bilibili's advertising revenue is projected to grow significantly, with a focus on increasing ad load and eCPM, supported by expanding verticals such as mini-games and AIGC applications [3][28]. Summary by Sections Financial Performance - Bilibili's revenue estimates for 2025-2027 have been slightly adjusted, with total revenues projected at RMB 30,376.6 million for 2025, RMB 33,460.3 million for 2026, and RMB 36,608.4 million for 2027 [6][19]. - The EBITDA for 2025 is estimated at RMB 4,531.7 million, with a significant growth trajectory expected in subsequent years [6][14]. Advertising Segment - Bilibili is experiencing one of the fastest advertising growth rates in China, with a projected advertising revenue of RMB 9,595 million for 2025, reflecting a year-on-year growth of 17% [20][28]. - The report notes that performance advertising has seen the fastest growth, increasing by 30-40% year-on-year in Q1 2025, now accounting for over 50% of total ads [29]. Gaming Segment - The resumption of the Pretty Derby game is expected to contribute positively to Bilibili's gaming revenue, with an annual grossing estimate of RMB 500 million [2][23]. - The Sanguo NSLG Season 8 is anticipated to introduce new gameplay and monetization strategies, which could further enhance revenue stability and growth [24][26]. Margin and Profitability - The report indicates a target of 40-45% gross profit margin and 15-20% adjusted operating profit margin in the mid-to-long term, driven by a favorable revenue mix and operating leverage [29]. - The EBITDA margin is projected to improve from 8.8% in 2024 to 20.0% by 2027, reflecting the company's focus on cost management and revenue growth [14][31].