20221130-招银国际-Focus_on_more_sustainable_growth_3页_1mb

Bilibili (BILI US) Summary

Core Content and Key Highlights

Bilibili (BILI US) reported its total revenue for 3Q22 at RMB5.8bn, representing an 11% YoY increase and 18% QoQ growth, in line with market expectations. The adjusted net loss widened by 9% YoY but narrowed by 10% QoQ to RMB1.76bn, better than the consensus estimate of RMB1.83/1.97bn. This was driven by a solid gross margin expansion (+3.2pct QoY) and effective control of marketing expenses (-25% YoY).

For 4Q22E, Bili guided total revenue to increase by 4–7% YoY to RMB6.0–6.2bn, with growth slowing due to relatively soft performance in the advertising and mobile game segments. Looking ahead, the company is shifting its focus from user growth to user quality, aiming to improve monetization efficiency and control expenses. It also remains confident in achieving its 400mn MAU target by 2023E.

Main Revenue Streams and Performance

• VAS (Value-Added Services): Revenue increased by 16% YoY to RMB2.2bn (38% of total revenue), driven by strong growth in live streaming MPUs (+79% YoY). VAS revenue is expected to continue its growth trajectory.
• Mobile Games: Revenue grew by 5.7% YoY to RMB1.5bn (25% of total revenue), supported by newly launched games. Self-developed games now account for 9% of mobile game revenue.
• Advertising: Revenue grew by 16% YoY to RMB1.4bn (23% of total revenue), with performance ads showing resilience. However, ad revenue is expected to be flattish YoY in 4Q22E due to high base effect and macroeconomic challenges.

Financial Metrics

• Average MAUs: Reached 333mn in 3Q22, up 25% YoY and 9% QoQ.
• DAU/MAU Ratio: Expected to rise to c.30% in 2023E from 27% in 3Q22.
• Gross Margin: Expanded to 18.2% in 3Q22, up from 16.9% in 2Q22.
• Operating Expenses Ratio: Declined to 50.1% in 3Q22 from 55.6% in 3Q21 and 59.7% in 2Q22.
• Adjusted Net Margin: Improved to -30.4% in 3Q22 from -31.0% in 3Q21 and -40.0% in 2Q22.

Revenue and Profit Forecast

The company has maintained its FY22–24E revenue forecast largely unchanged but has narrowed its adjusted net loss forecast due to better expense control.

Valuation and Target Price

• Target Price: US$21.0 per ADS, up from US$20.0, implying 2.2x and 1.9x 2022E/2023E PS.
• SOTP Valuation: Based on different segments, the total valuation is RMB58,127mn, with the following breakdown:
  • Advertising: US$7.1 (33.9% of total valuation), based on 12x net income at stabilized and enlarged user base.
  • VAS: US$7.0 (33.5% of total valuation), based on 1.5x VAS revenue at mature stage.
  • Mobile Games: US$6.3 (30.0% of total valuation), based on 12x net income at mature stage.
  • E-commerce: US$0.5 (2.6% of total valuation), based on 0.4x e-commerce revenue at stabilized user base.

Analyst Ratings and Share Performance

• Analyst Rating: BUY (Maintain), with a target price of US$21.00.
• Share Performance (12-mth):
  • Absolute: -40.8%
  • Relative: -36.0%

Shareholding and Financial Structure

• Major Shareholders:
  • Rui Chen: 12.6%
  • Tencent: 11.2%
• Market Cap: US$4,954.6mn
• Share Price Performance:
  • 1-mth: 40.7%
  • 3-mth: -50.1%
  • 6-mth: -40.8%

Peer Comparison

• Online Games:

  • NetEase (NTES US): 67.0 price, 16% FY22E EPS growth, 15x FY22E PE
  • Activision Blizzard (ATVI US): 74.7 price, (21)% FY22E EPS growth, 25x FY22E PE
  • Electronic Arts (EA US): 128.4 price, 27% FY22E EPS growth, 18x FY22E PE
  • Take Two Interactive (TTWO US): 101.3 price, 61% FY22E EPS growth, 21x FY22E PE

• Online Advertising:

  • Weibo (WB US): 13.4 price, (31)% FY22E EPS growth, 6x FY22E PE
  • Baidu (BIDU US): 94.6 price, (16)% FY22E EPS growth, 15x FY22E PE
  • Meta (Meta US): 108.8 price, (31)% FY22E EPS growth, 10x FY22E PE

• Online Video:

  • iQiyi (IQ US): 2.7 price, (16.4)% FY22E revenue growth, 0.6x FY22E PS
  • Mango Excellent Media (300413 CH): 25.6 price, (19.9)% FY22E revenue growth, 3.3x FY22E PS

• First-Party E-commerce:

  • JD (JD US): 49.9 price, (2.3)% FY22E revenue growth, 0.5x FY22E PS
  • Vipshop (VIPS US): 9.9 price, (22.5)% FY22E revenue growth, 0.4x FY22E PS

Analyst Disclosures

The analyst certifies that the views expressed accurately reflect their personal views and that no part of their compensation is directly or indirectly related to the specific views in the report. They also confirm no trading in the stocks covered within 30 days prior to the report and will not trade within 3 business days after the report. The analyst does not serve as an officer of any covered company and has no financial interests in them. CMBIGM or its affiliates have investment banking relationships with the issuers covered in the report.