HTSC·2025-10-14 07:06Investment Rating - The report initiates coverage on Bilibili (9626 HK) with a "Buy" rating and a target price of HKD 316.5, corresponding to a 2025E PS of 4.1x [1][7]. Core Insights - Bilibili has evolved from a niche community to a comprehensive video ecosystem, establishing a strong competitive moat through its unique community atmosphere and high user retention [2][18]. - The advertising business has transitioned into a systematic growth phase, with a projected revenue increase of 27.7% year-on-year in 2024, driven by a 40% growth in performance advertising [3][19]. - The gaming segment has shown robust recovery, with revenues reaching RMB 5.6 billion in 2024, a 40% year-on-year increase, supported by the successful launch of new games [4][22]. - The company is expected to achieve significant profit growth, with adjusted net profits projected at RMB 2.31 billion, RMB 3.18 billion, and RMB 3.99 billion for 2025-2027 [6][20]. Summary by Sections Community Ecosystem - Bilibili's community has a high retention rate, with over 80% for formal members and 84% for users registered for over ten years, indicating a deep user-platform bond [2][21]. - The platform's user base is predominantly young, with over 80% of users under 35 years old, showcasing a strong generational engagement [2][21]. Advertising Business - The advertising infrastructure has been fully established, enabling comprehensive coverage across various platforms, including long and short videos, PC, and search [3][19]. - AI technology integration is enhancing advertising efficiency, with a 10% year-on-year increase in eCPM in the first half of 2025 [3][19]. Gaming Business - The gaming revenue for 2024 is expected to reach RMB 5.6 billion, with a 40% year-on-year growth, driven by the successful launch of new titles [4][22]. - The strategy focuses on long-term operations and the introduction of younger game genres, with the upcoming release of "Three Kingdoms: Hundred Generals Card" expected to continue this trend [4][22]. Financial Performance - Revenue projections for 2025-2027 are RMB 30.03 billion, RMB 32.72 billion, and RMB 35.09 billion, respectively, with adjusted net profits expected to rise significantly [6][20]. - The overall gross margin is anticipated to improve from 17.6% in 2019 to 32.7% in 2024, driven by a higher proportion of high-margin advertising and gaming revenues [20].