Core Points - Bilibili Inc. held its annual general meeting in Shanghai, where all proposed resolutions were adopted [1] - Key resolutions included the re-election of directors, granting of mandates for share issuance and repurchase, and approval of a share incentive plan [2] Group 1: Corporate Governance - Mr. Rui Chen was re-elected as a director, along with Mr. JP Gan and Mr. Eric He as independent directors [2] - Directors were granted a general mandate to allot and issue additional Class Z ordinary shares and to repurchase Bilibili's own shares [2] Group 2: Share Incentive Plan - The second amended and restated 2018 share incentive plan was approved, allowing for the issuance of shares not exceeding 10% of Bilibili's total issued and outstanding shares [2] - Of the total shares, a maximum of 0.5% may be issued to service provider participants as defined in the plan [2] Group 3: Company Overview - Bilibili is a leading video community in China, focusing on enriching the lives of young generations through diverse video content [3] - The company is known for its "bullet chatting" feature, enhancing user engagement by displaying real-time comments during video viewing [3]

Investment Rating - The report maintains a "Buy" rating for Bilibili (BILI US) with a target price of $17.00, indicating a potential upside of 8.2% from the current closing price of $15.71 [8]. Core Insights - Bilibili's first SLG mobile game, "Three Kingdoms: Strategizing the World," has exceeded revenue expectations since its public launch on June 13, 2024, with projected first-month revenue between 500-800 million RMB [1][2]. - The game has achieved a high ranking on the iOS game download and sales charts, indicating strong user acceptance with an App Store rating of 4.4, slightly above competitors [1]. - The report highlights the long-term operational potential of SLG mobile games, suggesting that effective content updates and event operations could sustain revenue growth [2]. Summary by Sections Game Performance - "Three Kingdoms: Strategizing the World" has maintained a top position in the iOS game download rankings and sales charts, with a projected first-month revenue exceeding previous expectations [1]. - Comparatively, other SLG games like Alibaba's "Three Kingdoms Strategy Edition" have achieved a maximum monthly revenue of 1.2 billion RMB, showcasing the competitive landscape [1][3]. Market Strategy - The game differentiates itself by reducing time-consuming operations and enhancing player experience through lower spending requirements, which may attract a broader user base [1]. - Marketing strategies include multi-channel promotions and collaborations with content creators to engage core SLG players [1]. Future Growth Potential - The report anticipates that the new game could open up opportunities in overseas markets, referencing the international success of similar titles [1]. - Revenue contributions from "Three Kingdoms" are expected to accelerate in the second half of the year, potentially increasing overall game revenue by 12-20% in 2024, surpassing market expectations [2].

Investment Rating - The report maintains a "Buy" rating for Bilibili (BILI:US) [1][4] Core Views - Bilibili's Q1 2024 revenue reached 5.7 billion RMB, a year-on-year increase of 12%, slightly exceeding consensus expectations, marking a return to double-digit growth since Q4 2022 [2][5] - The adjusted net loss for Q1 2024 was 440 million RMB, better than the expected 500 million RMB, with the loss rate narrowing to 8% [2][3] - User metrics show healthy growth, with MAU reaching 342 million, a year-on-year increase of 8%, and DAU at 102 million, up 9% year-on-year [3] Financial Data and Earnings Forecast - Revenue (in million RMB) is projected as follows: - 2024E: 25,253 - 2025E: 28,139 - 2026E: 31,439 - Year-on-year growth rates are expected to be 12.1% in 2024, 11.4% in 2025, and 11.7% in 2026 [2][4] - Non-GAAP net profit (in million RMB) forecasts are: - 2024E: -415 - 2025E: 1,028 - 2026E: 1,882 - Non-GAAP EPS (in RMB) is expected to improve from -0.98 in 2024 to 4.47 in 2026 [2][4] Business Segments - Advertising revenue for Q1 2024 was 1.7 billion RMB, a year-on-year increase of 31%, driven by product optimization and efficiency improvements [3] - Value-added services revenue reached 2.5 billion RMB, a 17% year-on-year increase, primarily driven by live streaming [3] - Gaming revenue for Q1 2024 was 1 billion RMB, a year-on-year decline of 13%, with new product launches expected to boost performance in Q2 [3] Profitability and Cash Flow - Gross margin improved to 28% in Q1 2024, marking seven consecutive quarters of sequential improvement [3] - Operating cash flow for Q1 2024 was 640 million RMB, achieving positive cash flow for three consecutive quarters [3]

Market Overview - Chinese stocks are under scrutiny due to shifting global market dynamics, with higher interest rates expected to divert capital from riskier assets like Chinese stocks [1] - Recent military drills by China near Taiwan have added volatility to the Chinese stock markets amid U.S.-China tensions [1] - Investors are advised to be cautious when selecting Chinese stocks due to an unpredictable regulatory environment and complex geopolitical issues [1] Bilibili (BILI) - Bilibili, known as China's YouTube, has over 300 million monthly users and more than 100 million daily active users [2] - Despite a 20% year-to-date stock increase, the company faces modest growth with a year-over-year revenue growth of only 5.51%, significantly lower than its five-year average of 48% [2] - The company's financial metrics show negative year-over-year net income, EBITDA, and return on equity [2] Bilibili's Q1 Results - In its first-quarter results, Bilibili's mobile gaming segment experienced a 13.1% year-over-year revenue drop, significantly worse than analyst projections of a negative 2.8% [3] - The slowdown in the gaming segment raises concerns as the company aims to streamline operations and reduce less successful projects [3] Nio (NIO) - Nio is struggling in the competitive Chinese EV market, incurring significant losses each quarter without a clear path to profitability [4] - The stock has declined over 42% year-to-date and more than 34% last year, exacerbated by a broader market slowdown [4] - Nio's five-year average top-line growth is 899%, but its year-over-year growth is only 13%, with a negative 38% net income margin [5] iShares MSCI China ETF (MCHI) - The iShares MSCI China ETF is considered a stock to offload, as current bullishness appears to be unfounded in macroeconomic improvements [6] - MCHI is trading near its 52-week high of $44.97, with a year-to-date gain of almost 14%, but its long-term performance has been lackluster [6] - The ETF has an annualized volatility of 25%, significantly higher than the median for all ETFs, and an expense ratio of approximately 0.6%, which exceeds the median by 23% [6][7]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company achieved revenue of 5.7 billion yuan in Q1 2024, representing a year-over-year increase of 12% and a quarter-over-quarter decrease of 11%, with adjusted net loss narrowing to 456 million yuan, a 56% improvement compared to the same period last year [2][3] - The advertising business continues to show strong growth, with Q1 2024 revenue of 1.669 billion yuan, up 31% year-over-year, driven by optimized advertising products and improved efficiency [3] - The gaming business faced temporary pressure with Q1 2024 revenue of 983 million yuan, down 13% year-over-year, primarily due to the absence of new game launches [3] - The gross margin improved to 28.3%, up 6.6 percentage points year-over-year, indicating ongoing cost reduction and efficiency enhancement efforts [3] Summary by Sections Revenue and Profitability - Total revenue for 2024 is projected to be 21.899 billion yuan, with a year-over-year growth of 12% [2] - Non-GAAP net profit is expected to improve significantly from a loss of 4.822 billion yuan in 2023 to a loss of 1.726 billion yuan in 2024, and turning positive in 2025 with a profit of 274 million yuan [2][4] Business Segments - Advertising revenue is expected to continue growing due to seasonal events and improved product integration [3] - The gaming segment is anticipated to recover with new game launches, including "物华弥新" and "三国：谋定天下" [3] Financial Metrics - The company maintains a target of turning adjusted operating profit positive by Q3 2024, supported by improved operational efficiency [3][4] - The projected price-to-sales ratio for 2024 is 1.68, indicating a favorable valuation relative to expected revenue growth [4]

Investment Rating - The report maintains a **Buy** rating for Bilibili (BILI US) with a target price of **$20.50** per ADS, implying a 49.2% upside from the current price [2][5] Core Views - Bilibili reported **Q1 revenue growth of 12% YoY** to RMB 5.67 billion, in line with expectations, while adjusted net loss narrowed by **56% YoY** to RMB 456 million, better than expected due to stronger-than-expected GPM expansion [2] - The company is on track to achieve **non-GAAP operating breakeven in Q3 2024**, supported by robust GPM expansion and efficiency improvements [2][3] - FY24 adjusted net loss forecast has been revised down to **RMB 710 million** from RMB 896 million, reflecting improved operating leverage and efficiency gains [2] Revenue Breakdown - **Advertising revenue** grew **31% YoY** to RMB 1.67 billion in Q1, driven by strong performance-based advertising growth (over 50% YoY). Q2 advertising revenue is expected to grow **27% YoY** [3] - **VAS revenue** increased **17% YoY** to RMB 2.53 billion in Q1, supported by resilient live streaming and innovative VAS services. Q2 VAS revenue is expected to grow **16% YoY** [3] - **Mobile gaming revenue** declined **13% YoY** to RMB 983 million in Q1 but is expected to grow **5% YoY** in Q2, driven by strong performance of legacy games and new game launches [3] User and Ecosystem Growth - Average DAU grew **9% YoY** to 102.4 million in Q1, with average daily time spent increasing **9% YoY** to 105 minutes [3] - Bilibili expanded collaborations with e-commerce platforms, with management expecting **over 30% YoY growth** in total e-commerce advertising budgets during the 618 shopping festival, which is expected to drive Q2 advertising revenue growth [3] Profitability and Margins - Gross margin expanded **6.6 ppts YoY** and **2.2 ppts QoQ** to **28.3%** in Q1, driven by favorable revenue mix shifts and effective cost control. Q2 gross margin is expected to further improve to **29.4%** [3] - Adjusted net loss margin improved **12.5 ppts YoY** to **-7.8%** in Q1, with the company on track to achieve non-GAAP operating breakeven in Q3 2024 [3] Financial Forecasts - FY24 revenue is forecasted at **RMB 25.49 billion**, with gross profit expected to reach **RMB 7.64 billion** (30.0% gross margin). Adjusted net loss is projected at **RMB 710 million** [9] - FY25 revenue is expected to grow to **RMB 27.66 billion**, with gross profit reaching **RMB 8.99 billion** (32.5% gross margin). Adjusted net profit is forecasted at **RMB 1.16 billion** [9] SOTP Valuation - The **SOTP-derived target price of $20.50** includes: - **Advertising business** valued at $8.5 (41.3% of total valuation), based on 15x 2024E PE [11] - **VAS business** valued at $7.5 (36.7% of total valuation), based on 2.0x 2024E PS [11] - **Mobile gaming business** valued at $4.3 (20.8% of total valuation), based on 15x 2024E PE [11] Peer Comparison - Bilibili's valuation multiples are compared to peers in online gaming and advertising, with average PE multiples of **18x** for online gaming and **15x** for online advertising [12] - In the online video segment, Bilibili's PS multiple is compared to peers like iQiyi and Mango Excellent Media, with average PS multiples of **2.0x** for FY24E and **1.8x** for FY25E [13]

M 24 May 2024 CMB International Global Markets | Equity Research | Company Update Bilibili (BILI US) Revitalizing business model; intact breakeven target Target Price US$20.50 BiliBili reported 1Q24 results: total revenue increased by 12% YoY to RMB5.67bn, Up/Downside 49.2% in line with our/consensus estimate; adjusted net loss narrowed by 56% YoY to Current Price US$13.74 RMB456mn, beating our/consensus estimate of RMB518/498mn, mainly due to better-than-expected GPM expansion. Bili’s share price correctio ...

Financial Data and Key Metrics - Total revenues for Q1 2024 reached RMB5.7 billion, up 12% year-over-year [6] - Advertising revenue grew by 31% year-over-year to RMB1.7 billion, while VAS revenue increased by 17% to RMB2.5 billion [6][20] - Gross profit rose 45% year-over-year to RMB1.6 billion, with gross profit margin improving to 28.3% from 21.8% in Q1 2023 [6][24] - Adjusted operating loss and adjusted net loss narrowed by 52% and 56% year-over-year, respectively [7][24] - Operating cash flow for Q1 was RMB638 million, demonstrating strong financial health [7][25] Business Line Performance - Advertising business saw significant growth, driven by performance-based ads, which increased over 50% year-over-year [16][29] - VAS business growth was fueled by live broadcasting, with premium membership remaining steady at 21.9 million [20] - Game business generated RMB983 million in revenue, with new game launches like *San Guo: Mou Ding Tian Xia* expected to drive future growth [21][49] Market and User Engagement - DAUs increased by 9% year-over-year to 102 million, while MAUs grew by 8% to 341.5 million [8] - Average daily time spent on the platform reached a record 105 minutes, up from 96 minutes in Q1 2023 [8][13] - AI-related content saw significant growth, with daily active content creators and video views increasing by over 60% and 80% year-over-year, respectively [11] Strategic Direction and Industry Competition - The company is focusing on enhancing commercialization capabilities, particularly in high-margin revenue streams like advertising and VAS [9][16] - AI-driven tools are being developed to improve user experience, content creation, and ad targeting [14][15] - The company is expanding its game portfolio, with new titles like *San Guo: Mou Ding Tian Xia* and *Heaven Burns Red* expected to attract a broader gamer base [21][49] Management Commentary on Operating Environment and Future Outlook - Management expects to achieve positive non-GAAP operating profit in Q3 2024, driven by sustained revenue growth and margin improvement [25][63] - The company remains confident in maintaining high growth rates for its advertising business, with expectations of over 30% growth during the June 18th shopping festival [36][40] Other Important Information - The company completed a repurchase offer for its April 2026 notes, reducing its outstanding convertible bonds to $433 million [26] - ESG initiatives were highlighted, with the company publishing its 2023 annual ESG report, focusing on technological innovation and social welfare [22] Q&A Session Summary Question: Key drivers of advertising growth and outlook for Q2 2024 - Advertising growth was driven by increased ad inventory, improved ad placement tools, and AI-driven ad efficiency [29][30][31] - The company expects over 30% growth during the June 18th shopping festival, with brand advertising revenue projected to increase by 40% year-over-year [36][37] Question: Game business outlook and expectations for *San Guo: Mou Ding Tian Xia* - The company aims to stabilize legacy games while exploring new opportunities in the gaming market [43][44] - *San Guo: Mou Ding Tian Xia* has over 2 million pre-registrations and is expected to perform well upon its June 13th launch [49][50] Question: User engagement drivers and future content categories - Strong user engagement was driven by content categories like knowledge, ACG, and tech, with emerging categories like baby and maternity showing rapid growth [55][56] - The company plans to continue enhancing its content offerings to sustain user growth and engagement [58] Question: Cost control and margin outlook - Cost control efforts led to a 2% year-over-year increase in cost of revenue, while gross profit margin improved to 28.3% [24][61] - The company expects gross profit margin to reach 30% in Q3 2024, with non-GAAP operating breakeven anticipated [63] Question: Prospects of community-based content payment business - The company has nearly 22 million premium members, with 80% on long-term subscription plans [67] - Value-added services like premium courses and fan charging videos are growing rapidly, contributing close to RMB1 billion in revenue in Q1 [69][70]

Bilibili (BILI) came out with a quarterly loss of $0.15 per share versus the Zacks Consensus Estimate of a loss of $0.17. This compares to loss of $0.37 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 11.76%. A quarter ago, it was expected that this Chinese video sharing website would post a loss of $0.16 per share when it actually produced a loss of $0.19, delivering a surprise of -18.75%.Over the last four quarters, the comp ...

Investor Presentation May 2024 ...