Core Viewpoint - Zhongtai Securities projects Bilibili (09626) to achieve total revenue of 29.96 billion, 32.62 billion, and 35.32 billion yuan in 2025-2027, with year-on-year growth of +12%, +9%, and +8% respectively, and adjusted net profit of 2.26 billion, 3.26 billion, and 4.32 billion yuan, with year-on-year growth of +44% and +33% in 2026 and 2027. The average dynamic PE for comparable companies in 2025 is estimated at 26x. The company is in a commercialization acceleration phase, and AI is expected to enhance content creation efficiency and diversify commercialization methods, significantly impacting its advertising and gaming businesses, leading to an "overweight" rating for the first coverage [1]. Group 1: Company Overview - Bilibili is a leading video community in China, driven by a unique operational model and has become a significant player in the IP derivative market. By the end of 2024, the company will operate nearly 200 self-owned and authorized IPs, including national creations and comics. Since launching its official derivative brand in 2020, Bilibili has gradually built a core development model focused on "IP incubation and content empowerment," leveraging its high-engagement community and content ecosystem, and expanding into niche brands like figurines and blind boxes to enhance IP commercial value and cross-industry engagement [1]. Group 2: Business Highlights - AI: The "Peanut AI" tool is set to enhance content production and optimize ad placements, boosting eCPM. The AIGC tool will officially launch in Q4 2025, aimed at improving content quality and increasing traffic (DAU and per capita VV). It lowers the barrier for non-professionals to participate in content creation and enriches content diversity and innovation. Additionally, the InsightAgent system will integrate with various platforms to provide tailored AI solutions for different marketing scenarios [2]. - Advertising: Bilibili's advertising strategy includes three main approaches: single product promotions via Huohuo, oCPX effect ads, and brand advertising. Revenue from advertising is projected to grow by 27.7% and 20% in 2024 and the first half of 2025, reaching 8.2 billion and 4.4 billion yuan respectively. In Q3 2025, Bilibili's DAU reached 117 million, a 9% increase, with a DAU to MAU ratio of 31% and an average daily usage time of 112 minutes, up 6%. The company maintains a conservative approach to advertising commercialization, with an ad load rate of only 5-8%, indicating significant room for growth [3]. - Gaming: The gaming segment benefits from long-term operations of established games and new titles contributing incremental revenue. In H1 2025, gaming revenue reached 3.3 billion yuan, a 68% increase, driven by the success of "Three Kingdoms: Strategizing the World" and other enduring titles like "FGO" and "Azur Lane." The new game "Escape from Duckkov" has received positive feedback and is expected to contribute additional revenue [3].

Core Viewpoint - Zhongtai Securities projects Bilibili (09626) to achieve total revenue of 29.96 billion, 32.62 billion, and 35.32 billion yuan for 2025-2027, representing year-on-year growth of +12%, +9%, and +8% respectively, with adjusted net profit expected to be 2.26 billion, 3.26 billion, and 4.32 billion yuan, showing significant growth of +44% and +33% in 2026 and 2027 [1] Group 1: Company Overview - Bilibili is a leading video community in China, driven by a unique operational model and has become a significant player in the IP derivative market, operating nearly 200 self-owned and authorized IPs by the end of 2024 [2] - The company has developed an "IP incubation and content empowerment" model, leveraging its high-engagement community and content ecosystem, and has established a brand for derivative products since 2020 [2] Group 2: Business Highlights - AI marketing is enhancing content production and optimizing ad placements, with the launch of the "Peanut" AIGC tool expected to improve content quality and increase traffic [3] - Bilibili's advertising revenue is projected to grow by 27.7% and 20% in 2024 and the first half of 2025, reaching 8.2 billion and 4.4 billion yuan respectively, with a daily active user (DAU) count of 117 million in Q3 2025, reflecting a 9% year-on-year increase [4] - The gaming segment is benefiting from both long-term operations of existing games and new game launches, with gaming revenue reaching 3.3 billion yuan in the first half of 2025, marking a 68% year-on-year increase [4]

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [3]. Core Insights - The company is positioned as a leading IP ecosystem platform in China, leveraging content and community operations to drive growth. It has developed nearly 200 IPs and is enhancing its commercial value through a unique product development model [6][11]. - The company is expected to achieve total revenues of 29.96 billion, 32.62 billion, and 35.32 billion yuan from 2025 to 2027, with year-on-year growth rates of 12%, 9%, and 8% respectively. Adjusted net profits are projected to be 2.26 billion, 3.26 billion, and 4.33 billion yuan, with significant growth in the latter two years [44][43]. Summary by Sections Company Overview - The company has a total share capital of 413.76 million shares, with a market price of HKD 190.80, resulting in a market capitalization of approximately HKD 78.95 billion [1]. - The company has undergone significant development since its inception in 2009, evolving from a community platform to a comprehensive video community with a focus on IP development and commercialization [10][11]. Business Highlights - AI marketing is enhancing content production and optimizing advertising efficiency, with the introduction of the "Peanut AI" tool expected to significantly improve content creation and advertising effectiveness [25][27]. - The advertising business is projected to grow substantially, with revenues expected to increase by 27.7% and 20% in 2024 and the first half of 2025, respectively [29][31]. - The gaming segment is also showing strong performance, with revenues from established games and new releases contributing to overall growth. The game "Three Kingdoms: Strategize the World" has been a key driver of revenue [37][34]. Financial Forecast and Valuation - The company is expected to see a steady increase in revenue and profitability, with adjusted net profits turning positive by 2025. The projected P/E ratio for 2025 is 32.2, indicating a favorable valuation compared to peers [41][44]. - The financial analysis indicates a significant improvement in gross margins, expected to reach 39.6% by 2027, driven by operational efficiencies and revenue growth [43][20].

Core Insights - The company reported a better-than-expected performance in Q3 2025, with revenue of 7.69 billion yuan, a 5% year-on-year increase, and Non-GAAP net profit of 787 million yuan, exceeding expectations due to strong advertising revenue growth and improved gross margin [1][2] Performance Review - Q3 2025 revenue reached 7.69 billion yuan, surpassing the forecast of 7.61 billion yuan - Non-GAAP net profit was 787 million yuan, significantly above the expected 563 million yuan - Advertising revenue grew by 23% year-on-year to 2.57 billion yuan, contributing to the overall revenue increase [1] - Gross margin improved by 0.2 percentage points to 36.7%, while adjusted net profit margin increased by 2.6 percentage points to 10.2% [1] Development Trends - The upward trend in profit margins is driven by strong advertising business growth - The company anticipates Q4 2025 advertising revenue to increase by 23% to 2.93 billion yuan, with a projected gross margin of 37% and adjusted operating profit margin of 9% [1] - Long-term profit margin improvement is expected due to revenue growth, better revenue structure, and operational leverage [1] Game Revenue and New Releases - Game revenue in Q3 2025 decreased by 17% year-on-year to 1.511 billion yuan due to a high base from Q3 2024 - New game projects are underway, including "Escape from Duckkov" and "Three Kingdoms: Hundred Generals Card," with potential revenue contributions starting from Q2 2026 [2] - The company reported a 7% increase in value-added service revenue to 3.02 billion yuan, with a 17% rise in paid user count to 35 million [2] Profit Forecast and Valuation - The net profit forecast for 2025 and 2026 has been raised by 7.8% and 2.3% to 2.44 billion yuan and 3.06 billion yuan, respectively - Current stock prices correspond to P/E ratios of 40/29 times and 36/26 times for 2025/2026 [2] - Target prices have been adjusted upward by 7.4% and 7.8% to 29 USD and 220 HKD, indicating potential upside of 6.7% and 3.4% from current prices [2]

Core Insights - The article emphasizes the importance of leveraging Douyin's ecosystem to drive brand growth during the upcoming 618 shopping festival through a comprehensive marketing strategy that integrates brand advertising, influencer marketing, and data insights [1][21]. Group 1: Marketing Strategy - The "品星云" marketing capability integrates brand advertising, 巨量星图, and 巨量云图 to enhance brand performance during the 618 event [1]. - Brand advertising focuses on "inventory preemption + exposure assurance" to create a reliable flow of traffic, ensuring brands can achieve both volume and sales growth [1][10]. - The "短直联动" feature connects short videos with Douyin's e-commerce live streams, significantly improving conversion rates by enhancing user engagement [8][9]. Group 2: Content and Consumer Insights - 巨量云图 provides deep consumer insights by identifying distinct consumer segments based on behavior and preferences, allowing brands to target their marketing efforts more effectively [3][15]. - The platform has upgraded its industry-specific consumer groups to help brands create and discover high-quality content that resonates with their target audience [3]. Group 3: Influencer Marketing - 巨量星图 enables brands to collaborate with a large number of mid-tier influencers efficiently, enhancing content creation and marketing effectiveness [5]. - The platform offers various influencer groups tailored to specific marketing needs, such as product reviews and promotional events, ensuring a comprehensive approach to influencer marketing [5]. Group 4: Policy and Incentives - The "品星云" initiative introduces a multi-faceted support system, including resource incentives and data empowerment, to help brands maximize their growth potential during the 618 event [17]. - Specific incentives include a "million incentive pool" for brand advertising, with potential rewards reaching up to 200,000 for individual clients, aimed at encouraging increased investment in advertising [17][19]. Group 5: Performance Tracking and Optimization - 巨量云图 offers a real-time operational dashboard for brands to monitor their performance throughout the different phases of the 618 event, allowing for targeted adjustments and strategy optimization [13][15]. - The platform's SPU5A capability tracks new product performance, providing insights into consumer engagement and sales effectiveness, thereby increasing the likelihood of successful product launches [15].