Incident: On March 20, the State Press and Publication Administration announced the approval results for the first batch of imported online game versions in 2023. “Shine!” by Bilibili's agent The edition of “A Beautiful Girl” was approved.
“Shine! “A Beautiful Girl” has performed well overseas, and the domestic launch time will be earlier than expected after the edition is approved. “Shine! “Beautiful Girl” was developed by the Japanese manufacturer Cygames and has previously achieved excellent revenue performance in overseas markets. According to Sensor Tower statistics, “Shine! Since its launch in Japan in February 2021, “Beautiful Girl” has been number one on the iOS bestseller list many times, and has been the global RPG mobile game revenue champion in 2021 and the first three quarters of 2022. “Shine! “Beautiful Girl” is expected to launch in the domestic market soon after receiving the edition number. Additionally, the company's eight self-developed and agency products will be launched on the global market in the first half of '23. Looking ahead to the whole year, on the one hand, new products began to contribute to revenue after they were launched; on the other hand, the time interval for approval and publication of imported versions this time was 3 months, which is significantly shorter than previous years. It is expected that various agency products reserved by the company will benefit from improved policy environments and continue to optimize supply. The company's game business revenue is expected to grow at a year-on-year rate of about 20% in 2023.
The advertising business is expected to recover in the second half of the year, and the revenue structure continues to be optimized. The company provides new advertising scenarios such as Story-Mode and brands grow grass and bring goods. Advertisements from e-commerce, FMCG, and the automobile industry continue to increase. As consumer spending capacity recovers, the company's advertising revenue is expected to recover in the second half of '23. In 2023, advertising revenue increased by more than 25% year-on-year, which is higher than the market average. Under the cost reduction and efficiency strategy, the activity of the company's core users is expected to increase steadily, driving revenue growth from value-added services business. Revenue from value-added services is expected to increase by about 20% year-on-year in 2023. In the future, the company's revenue growth will be driven more by games and advertisements with higher gross profit, and gross margin is expected to improve further.
Profit forecast and investment advice: The launch of key agency product versions is expected to accelerate after the review. The advertising business will recover in the second half of the year. We are optimistic about the company's revenue structure and increased profitability. The company's revenue for 2023/2024/2025 is expected to be 253/309/36.9 billion yuan, +16%/+22%/+19% over the same period last year; adjusted net profit of 34/9/14 billion, maintaining the “buy” rating.
Risk warning: commercialization falls short of expectations, user growth falls short of expectations, policy supervision risks.