20220610-招银国际-Better_margin_and_ads_recovery_ahead_4页_842kb

Bilibili (BILI US) Company Update Summary

Core Content Overview

This report provides an analysis of Bilibili's financial performance and outlook for the 1Q22 and future quarters (2Q22E, FY22E–FY24E). It highlights the company's mixed results, margin dynamics, and the potential for recovery in key revenue segments such as advertising and e-commerce.

Key Financial Performance

1Q22 Results:

• Revenue: +30% YoY (RMB5,054 million), in line with consensus.
• Non-GAAP Net Loss: RMB1.65 billion, missing consensus of -RMB1.57 billion.
• Gross Margin: 16.0%, down from 19.0% in 4Q21.
• Operating Margin: -39.4%.
• Adj. Net Margin: -32.7%.

Revenue Segments:

• Mobile Games: +16% YoY (RMB1,358 million), 5% above CMBIGM estimate.
• Live Broadcasting & VAS: +37% YoY (RMB2,052 million), 2% below CMBIGM estimate.
• Advertising: +46% YoY (RMB1,041 million), in line with expectations.
• Others: +16.2% YoY (RMB603 million).

Outlook for 2Q22E

• Revenue Guidance: RMB4.85–4.95 billion (+8%–10% YoY), midpoint 1% above consensus.
• Revenue Growth: +9% YoY.
• Segment Growth:
  • Mobile Games: Low-teens YoY decline.
  • Advertising: +6% YoY.
  • VAS: +30% YoY.
  • Others: Flat YoY.
• Gross Margin (GPM): Forecasted at 15%, lower than 1Q22 (16%).
• Operating Expenses (Opex): Flat QoQ.
• Adj. NPM: Expected to improve sequentially in 2H22E due to higher GPM and cost control.

Outlook for 2H22E

• Ads & E-commerce Recovery: Expected to rebound due to lockdown relaxation and epidemic stabilization.
• Ads: +24% YoY.
• E-commerce: Expected to recover gradually.
• Adj. NPM: Improved sequentially, with better GPM and opex control.
• Game Segment: May see slower rebound compared to license resumption.
• Key Launch: "Pretty Derby" (overseas version) scheduled for June 2022.

Financial Forecasts

Adjusted Target Price and Ratings

• Target Price (TP): US$40 (adjusted from US$43).
• TP Relative to Current Price: +53.8% upside.
• Current Price: US$24.5.
• Rating: BUY.
• Rationale: Potential return of over 15% over next 12 months, with updated NPM forecasts and margin improvement expectations.

Key Ratios and Metrics

• Gross Margin: Forecasted to rise to 25.4% in FY24E.
• Operating Margin: Expected to improve to -11.6% in FY24E.
• Adj. Net Margin: Projected to improve to -6.6% in FY24E.
• Effective Tax Rate: Expected to be 0.2% in FY24E.
• ROE: -38.6% in FY20A, -30.2% in FY21A.
• ROA: -10.8% in FY20A, -9.8% in FY21A.

Shareholding and Market Data

• Market Cap: US$10,949 million.
• Average 3-Month Turnover: US$308.34 million.
• 52-Week High/Low: US$129.2 / US$14.9.
• Total Issued Shares: 307 million.

Shareholding Structure

• FMR LLC: 6.35%
• Alibaba Group Holding Ltd: 3.26%
• Yiheng Capital: 3.05%

Share Performance

Analyst and Disclaimer Information

• Analyst: Sophie Huang and Eason Xu.
• Auditor: PwC.
• Ratings: BUY.
• Disclosures: The report is not investment advice and is for informational purposes only. CMBIGM does not provide tailored advice and is not liable for any reliance on the report.

Summary of Key Points

• Mixed 1Q22 Results: Revenue in line with consensus, but net loss missed expectations.
• Margin Pressure: GPM declined in 2Q22E, but adj. NPM is expected to improve in 2H22E.
• Segment Performance: Ads and VAS are expected to rebound, while games may face slower growth.
• Target Price: Adjusted to US$40 (3.5x FY23E P/S).
• Investor Considerations: Potential for margin improvement and growth recovery in 2H22E, with a BUY rating.

Conclusion

Bilibili's performance in 1Q22 was mixed, with revenue growth in line with expectations but a net loss that underperformed. The report suggests that the company's margins may improve in the second half of 2022 due to recovery in advertising and e-commerce, as well as cost control measures. Despite the challenges in the game segment, the overall outlook remains positive, leading to a BUY rating and an adjusted target price of US$40. Investors are advised to independently evaluate the stock and consider professional advice before making investment decisions.