哔哩哔哩：Strong mobile games and ad businesses support solid 3Q24 results

Investment Rating - The report maintains a "BUY" rating for Bilibili with a target price of US$22.00, reflecting an upside potential of 18.3$18.59 [3][7]. Core Insights - Bilibili reported a total revenue of RMB7.31 billion for 3Q24, representing a 26% year-over-year increase, which exceeded both the report's and Bloomberg's consensus estimates [1]. - The company achieved quarterly breakeven with an adjusted net income of RMB236 million, a significant improvement from an adjusted net loss of RMB878 million in 3Q23 [1]. - The strong performance is attributed to the success of the new game title SanMou and effective cost optimization initiatives [1]. - For 4Q24, total revenue is expected to grow by 21% year-over-year, with adjusted net margin projected to expand to 5.3% [1]. Revenue Performance - Mobile games revenue surged by 84% year-over-year to RMB1.82 billion in 3Q24, driven primarily by SanMou's performance [1]. - Advertising revenue increased by 28% year-over-year to RMB2.09 billion, supported by approximately 50% growth in performance-based ads [1]. - Value-Added Services (VAS) revenue rose by 9% year-over-year to RMB2.82 billion, mainly due to growth in premium membership and Fan Charging revenue [1]. Future Outlook - The report forecasts continued revenue growth momentum into 4Q24, with mobile games, advertising, and VAS revenues expected to grow by 78%, 24%, and 5% year-over-year, respectively [1]. - SanMou's upcoming Season 4 launch is anticipated to further boost mobile game revenue in 4Q24 [1]. - Management expects advertising revenue to maintain faster-than-industry growth, supported by increasing ad inventories and improving monetization efficiency [1]. Margin Expansion - The overall gross profit margin expanded by 9.9 percentage points year-over-year to 34.9% in 3Q24, attributed to cost optimization and strong mobile game performance [1]. - Adjusted net margin improved by 18.4 percentage points year-over-year to 3.2% in 3Q24, with expectations for further expansion to 5.3% in 4Q24 [1]. Financial Forecasts - The report updates the revenue forecasts for FY24-26, increasing them by 1-5% due to robust game performance [1]. - For FY24E, total revenue is projected at RMB26.78 billion, with a gross margin of 32.8% and an adjusted net profit of RMB68 million [2][4].