Core Viewpoint - Huatai Securities initiates coverage on Bilibili's Hong Kong stock with a "Buy" rating and a target price of HKD 316.5, corresponding to a 25E PS of 4.1x, highlighting the company's unique position as a mid-video community platform with a solid ecosystem and robust user retention [1][2]. Group 1: Community and User Engagement - Bilibili has evolved from a niche ACG community to a comprehensive video ecosystem over 15 years, establishing a competitive moat through its unique community atmosphere and closed-loop ecosystem [1]. - The platform primarily attracts a young demographic, with over 80% of users under 35 years old, showcasing high user retention rates, including over 80% for formal members and more than 84% for users with over ten years on the platform [1]. Group 2: Advertising Business - The advertising segment has transitioned from an exploratory phase to systematic and scalable growth, with an expected overall revenue growth of 27.7% in 2024, driven by a 40% increase in performance advertising [1]. - The completion of the advertising infrastructure and the integration of AI technology have significantly enhanced advertising efficiency, with a projected 10% year-on-year increase in eCPM for the first half of 2025 [1]. Group 3: Gaming Business - The gaming segment has shown a strong recovery, with revenues reaching CNY 5.6 billion in 2024, a 40% year-on-year increase, largely due to the successful launch of the new game "Three Kingdoms: Strategy Determination" [2]. - The strategy focuses on long-term operation and youth-oriented game categories, with both self-developed and exclusive agency games contributing to revenue growth [2]. Group 4: Market Perspective and Valuation - The market tends to focus on valuation and growth certainty, but the company’s community advantages and high active user growth remain underappreciated [2]. - Revenue projections for 2025-2027 are CNY 30.03 billion, CNY 32.72 billion, and CNY 35.09 billion, with adjusted net profits expected to be CNY 2.31 billion, CNY 3.18 billion, and CNY 3.99 billion respectively [2].

Core Viewpoint - Bilibili's Q2 2025 financial results exceeded expectations, with significant growth in revenue and net profit, driven by advertising and live streaming services [1][2] Group 1: Financial Performance - In Q2 2025, Bilibili reported revenue of 7.34 billion CNY, a year-over-year increase of 19.8%, slightly above Bloomberg's expectations by 0.1% [1] - Non-GAAP net profit reached 560 million CNY, compared to a net loss of 270 million CNY in the same period last year, exceeding Bloomberg's expectations by 7.5% [1] - The company anticipates Q3 2025 revenue to reach 7.5 billion CNY, reflecting a year-over-year growth of 21% [1] Group 2: Advertising Revenue - Q2 2025 advertising revenue was 2.45 billion CNY, up 20.2% year-over-year, and also above Bloomberg's expectations by 1.3% [1] - Factors contributing to this growth include participation in the "潮流起飞" project, improved ad distribution efficiency through multimodal models, and AI-generated ad covers enhancing ECPM [1] - The company expects Q3 2025 advertising revenue to reach 2.5 billion CNY, maintaining strong growth due to potential expansion across multiple screens and scenarios [1] Group 3: Live Streaming and VAS Revenue - Live streaming and VAS revenue in Q2 2025 was 2.84 billion CNY, a year-over-year increase of 11%, exceeding Bloomberg's expectations by 0.3% [2] - The growth is primarily driven by the charging business, with expectations for Q3 2025 revenue to reach 3.1 billion CNY, reflecting a year-over-year growth of 10% [2] Group 4: Gaming Revenue - Q2 2025 gaming revenue was 1.61 billion CNY, a significant year-over-year increase of 60%, although slightly below Bloomberg's expectations by 0.2% [2] - Due to a high base from last year's game releases, gaming revenue is expected to decline in Q3 2025 to 1.5 billion CNY, a year-over-year decrease of 15% [2] - New game releases are anticipated to contribute to revenue growth in 2026, with titles like "三国卡牌" and "嘟嘟脸恶作剧" expected to launch by year-end [2] Group 5: Revenue Forecast - The company projects revenues of 30.1 billion CNY, 32.9 billion CNY, and 34.8 billion CNY for 2025, 2026, and 2027 respectively, adjusting previous forecasts due to advertising expansion and revised sales expense predictions [2] - The target price is set at 211.53 HKD (193.06 CNY), based on a comparable company PS average of 2.7x for 2025, maintaining a "buy" rating [2]

Core Insights - Bilibili (B站) reported a total revenue of 7.34 billion RMB for Q2 2025, marking a 20% year-over-year increase [1] - The company achieved a historical high in both net profit and adjusted net profit, reaching 220 million RMB and 560 million RMB respectively [1] - Bilibili's CEO emphasized the importance of high-quality content in driving the platform's unique community ecosystem and commercial growth [1] Revenue Breakdown - In Q2, Bilibili's revenue sources included 39% from value-added services, 33% from advertising, 22% from gaming, and 6% from IP derivatives and other businesses [2] - Advertising revenue for Q2 was 2.45 billion RMB, also reflecting a 20% year-over-year growth, with brand advertising and performance advertising growing by approximately 30% [2] - Gaming revenue reached 1.61 billion RMB, showing a significant 60% year-over-year increase, driven by long-term operational strategies [3] User Engagement - Bilibili's daily active users reached 109 million, a 7% increase year-over-year, while monthly active users hit 363 million, up 8% [1] - The average daily usage time per user was 105 minutes, which is 6 minutes longer than the same period last year [1] - The number of monthly paying users grew by 9% to 31 million [1] Creator Monetization - Approximately 2 million content creators (UP主) earned income through various channels, with significant growth in revenue from advertising and live streaming [2] - The number of UP主 earning from merchandise sales increased by 49% year-over-year, while total income from charging exceeded a 100% increase [2] Financial Performance - Bilibili's gross profit rose by 46% year-over-year, with gross margin improving to 36.5%, up from 29.9% a year earlier [3] - The company generated 1.99 billion RMB in positive operating cash flow and completed a stock buyback of approximately 100 million USD [3] - As of June 30, 2025, Bilibili held cash and cash equivalents totaling 22.29 billion RMB [3]