【行业研究报告】哔哩哔哩-Prioritizing profitability and quality user growth

2Jun20232Jun2023CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateBilibili(BILIUS)PrioritizingprofitabilityandqualityusergrowthBiliBilireported1Q23resultson1Jun.TotalrevenuewasflatYoYatRMB5.1bnin1Q23,inlinewithCMBI/consensusestimate.Adjustednetlossnarrowedby38%YoYtoRMB1.0bnin1Q23,beatingCMBI/consensusestimateby6/10%.Thebetter-than-expectedprofitabilitywasduetoBili’sstrategytoprioritizequalityusergrowthandmonetizationimprovement.AverageDAUsgrewby18%YoYto94mnin1Q23,withDAU/MAUratioreaching29.7%(+2.7pctYoY).For2Q23E,weforecasttotalrevenuetogrowby7%YoYtoRMB5.2bnandadjustednetlosstofurthernarrowsequentially.WelowerFY23totalrevenueforecastby3%toRMB24.1bnmainlyduetolessvisibilityongamesbusinessoutlook,butmaintainearningsforecastlargelyunchanged.WetrimourSOTP-basedTPby9%toUS$27.2onslowerrevenuegrowthoutlookandlowersectorvaluationmultipleamidmarketuncertainty.MaintainBUY.Solidadbusiness;gamebusinessremainsunderpressure.Adrevenuedeliveredstronggrowthof22%YoYandrepresented25%oftotalrevenuein1Q23,drivenbyrobustgrowthofperformance-basedadrevenue(+50%YoY).Throughdeepeningdatacooperation,Bili’sadrevenuefrommajore-commerceplatformsgrewbyover110%YoYin1Q23.VASrevenueincreasedby5%YoYtoRMB2.2bn(3Q22/4Q22:+16/24%YoY)andaccountedfor43%oftotalrevenuein1Q23.ThenumberofmonthlyactivelivestreaminghostsandMPUsgrewby34%and15%YoYin1Q23,drivenbybetterintegrationoflivestreamingandvideocontentecosystem.Mobilegamesrevenuedeclinedby17%YoYtoRMB1.1bnin1Q23(22%oftotalrevenue),mainlyduetolackofnewgames.Lookingahead,Bilihas13gameslinedupforlaunchincomingquarters(8/5gamesindomestic/overseasmarket),includingthehighly-anticipatedtitlePrettyDerbywhichisplannedforlaunchinthissummer.Focusonqualityusergrowth.Onuserecosystem,BiliwillcontinuetofocusondrivingDAUgrowth,whichcanbebetterconvertedtomonetizationopportunities.AverageDAUs/MAUsgrewby18/7%YoYto94/315mnin1Q23,withDAU/MAUratioreaching29.7%(+2.7pctYoY).AveragedailytimespentperDAUwasstableYoYandQoQat96minutesin1Q23.Averagedailyvideoviewsgrewby37%YoYin1Q23,withPUGV/StoryModevideoviewsupby82/26%YoYrespectively.ExpectfurtherenhancingGPMandnarrowingnetloss.Grossmarginroseby5.8pctYoYand1.5pctQoQto21.8%in1Q23,drivenby8%/16%savinginrevenue-sharingcosts/bandwidthcosts.DespitethesolidDAUgrowth,salesandmarketingdecreasedby30%YoYasBilifocusesonmorequalityusergrowth.Adjustednetlossmarginimprovedfrom-33%in1Q22to-20%in1Q23.Lookingforward,weexpectfurtherimprovinggrossmarginandnarrowingnetlosssequentially,supportedbyBili’sstringentcontroloncostsandexpenses.TargetPriceUS$27.20(PreviousTPUS$30.00)Up/Downside73.7%CurrentPriceUS$15.66ChinaInternetSaiyiHE,CFA(852)39161739hesaiyi@cmbi.com.hkWentaoLU,CFAluwentao@cmbi.com.hkYeTAOfranktao@cmbi.com.hkSophieHUANG(852)39000889sophiehuang@cmbi.com.hkEasonXU(852)39000849StockDataMktCap(US$mn)6,429.4Avg3mthst/o(US$mn)106.452wHigh/Low(US$)29.71/8.92TotalIssuedShares(mn)410.6Source:FactSetShareholdingStructureRuiChen13.7%Tencent9.3%Source:CompanydataSharePerformanceAbsoluteRelative1-mth-23.1%-27.3%3-mth-18.9%-28.1%6-mth-9.8%-20.0%Source:FactSet12-mthPricePerformanceSource:FactSetEarningsSummary(YE31Dec)FY21AFY22AFY23EFY24EFY25ERevenue(RMBmn)19,38421,89924,14926,33428,622YoYgrowth(%)61.513.010.39.08.7Grossmargin(%)20.917.624.829.031.6Operatingprofit(RMBmn)(6,429)(8,358)(5,009)(2,893)(1,414)Netprofit(RMBmn)(6,789.2)(7,497.0)(4,816.3)(2,746.1)(1,090.8)Adjustednetprofit(RMBmn)(5,478.1)(6,691.7)(3,668.7)(1,494.6)269.3EPS(Reported)(RMBcents)(1,787.69)(1,905.03)(1,173.09)(668.86)(265.69)ConsensusEPS(RMBcents)(1,442.44)(1,700.40)(939.43)(281.69)254.01P/S(x)2.42.11.91.71.6Source:Companydata,Bloomberg,CMBIGMestimates