20220720-招银国际-The_worst_is_over_4页_877kb

Bilibili (BILI US) Company Update Summary

Core Content

This report provides an update on Bilibili (BILI US), focusing on its financial performance, business segments, and future outlook for FY22E and beyond. The analysis is based on company data, Bloomberg, and CMB International Global Markets (CMBIGM) estimates.

Main Points

Financial Performance in 2Q22E

• Revenue: Expected to grow +9% YoY (in line with previous guidance), reaching RMB4,887 million.
• Segment Performance:
  • Game: -13% YoY, due to limited new titles and amortization.
  • Ads: +6% YoY, with gradual recovery from e-commerce and auto verticals in June.
  • VAS: +30% YoY, showing resilience.
  • Others: +0% YoY.
• Gross Margin (GPM): Expected to be the lowest at 15%, then improve to 17% in 3Q22E and 20% in 4Q22E.
• Non-GAAP Net Loss: Forecasted at RMB2.0 billion for 2Q22E, with flat operating expenses (opex) compared to the previous quarter.

Outlook for 2H22E

• Revenue Rebound: Expected to rebound to +13% YoY in 3Q22E, reaching RMB5.9 billion.
• Ads Recovery: Gradual recovery in e-commerce and auto verticals, with Story mode expected to drive higher time spent and eCPM, potentially boosting ad revenue by +24% YoY in 2H22E.
• Margin Improvement: Adj. NPM is expected to improve sequentially, driven by higher GPM and cost control in sales and marketing (S&M).
• S&M Ratio: Forecasted to be <25% in 2H22E.

Stock Performance

• Target Price (TP): Maintained at US$40, implying a +58.1% upside from the current price of US$25.3.
• Price Performance (12-Month): Available as a chart, showing historical price movements.
• Market Capitalization: US$9,542 million.
• Shareholding Structure:
  • FMR LLC: 6.35%
  • Alibaba Group Holding Ltd: 3.26%
  • Yiheng Capital: 3.05%

Key Information

Revenue Growth

• FY20A: RMB11,999 million
• FY21A: RMB19,384 million
• FY22E: RMB22,879 million
• FY23E: RMB28,848 million
• FY24E: RMB35,210 million
• YoY Growth: 77% (FY20A), 62% (FY21A), 18% (FY22E), 26% (FY23E), 22% (FY24E)

Adjusted Net Profit

• FY20A: RMB-2,580 million
• FY21A: RMB5,127 million
• FY22E: RMB6,718 million
• FY23E: RMB5,164 million
• FY24E: RMB2,316 million

Adjusted EPS

• FY20A: RMB-7.46
• FY21A: RMB13.73
• FY22E: RMB16.66
• FY23E: RMB12.68
• FY24E: RMB4.94

P/S Ratio

• FY20A: 5.4
• FY21A: 3.3
• FY22E: 2.8
• FY23E: 2.2
• FY24E: 1.8

Margin Trends

• Gross Margin: Expected to rise from 15% in 2Q22E to 17% in 3Q22E and 20% in 4Q22E.
• Operating Margin: Expected to improve sequentially in 2H22E, from -40.9% to -33.7% in FY22E.
• Adj. Net Margin: Expected to improve from -40.4% to -29.4% in FY22E.

Analyst Recommendation

• Rating: BUY
• Target Price: US$40, based on 3.5x FY23E P/S.

Related Reports

1. Better margin and ads recovery ahead – 10 Jun 2022
2. Factoring in epidemic impact – 4 May 2022
3. Shifting into efficiency enhancement – 4 Mar 2022

Key Ratios

• Sales Mix:
  • Mobile Games: 22.3% (FY22E)
  • Live Broadcasting & VAS: 40.0% (FY22E)
  • Advertising: 24.5% (FY22E)
  • Others: 13.3% (FY22E)
• Adj. Net Margin: -29.4% (FY22E)
• Effective Tax Rate: 0.6% (FY22E)
• ROE: -38.6% (FY20A), -30.2% (FY21A), NA (FY22E)

Summary of Recommendations

• CMBIGM Ratings:
  • BUY: Stock with potential return of over 15% over the next 12 months.
  • OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.

Disclaimer

• This report is for informational purposes only and is not investment advice.
• No liability is assumed for any loss or damage incurred from relying on the information.
• The report is not suitable for all investors and should be used in conjunction with independent evaluation and professional financial advice.

Analyst Certification

• The analyst certifies that:
  • All views reflect personal opinions.
  • No compensation is directly or indirectly related to the report's content.
  • No trading in the stock covered in the report occurred within 30 days prior to the report's issue, and will not occur within 3 business days after.

Important Disclosures

• The report may include conflicts of interest due to potential investment banking relationships.
• CMBIGM is not a registered broker-dealer in the U.S. and is not subject to U.S. research report rules.
• The report is intended for major U.S. institutional investors only.

Legal & Regulatory Notes

• UK Recipients: Only for persons within Article 19(5) or Article 49(2)(a)-(d) of the Financial Promotion Order.
• US Recipients: Only for "major U.S. institutional investors" under Rule 15a-6.
• Singapore Recipients: Distributed by CMBISG, an Exempt Financial Adviser, and may not be provided to non-accredited investors without prior consent.

Conclusion

The report concludes that the worst is over for Bilibili in FY22E, with ads recovery and margin improvement expected in 2H22E. The company is anticipated to see revenue rebound, improved gross margins, and operating margin improvements through cost control and efficiency measures. Analysts maintain a BUY rating and a target price of US$40, reflecting confidence in the company's future performance.