Today$BILIBILI-W (09626.HK)$Hong Kong stocks are strong and rising, with an increase of more than 19% as of the time of writing, and the market cap has increased by approximately HKD 7 billion, reaching a new high in nearly 10 months.

According to market news, JPMorgan raised its rating for Bilibili (B station) to overweight and raised its target price for Hong Kong-listed shares to HKD 165 and ADR target price to USD 21.

JPMorgan believes that the company's second-quarter performance is expected to be the next catalyst for the stock price. With the support of strong gaming performance, the market also has room to raise its forecast for the third quarter of 2024.

The breakthrough in B station's gaming business is the most noteworthy. On June 13th, B station's exclusive SLG mobile game 'Three Kingdoms: Plan to Conquer the World' was officially launched for public testing, and since the pre-download opened on June 11th, it has steadily ranked in the top two of the iOS game download charts.

From June 13th to 17th, 'Three Kingdoms: Plan to Conquer the World' maintained third place in the iOS game sales chart. Data shows that as of June 17th, the game had an estimated total revenue of 83.83 million yuan on the iOS platform for five days.

The Bocom International Internet team stated in a report on June 18th that the current rating of 'Three Kingdoms: Plan to Conquer the World' on the Apple App Store is higher than that of competing products, indicating that user acceptance of the game is in line with expectations. In addition, the producer has previously revealed its intention to go overseas, and the performance of the international version is also worth looking forward to.

Considering the long-term operational potential of the SLG strategy mobile game, Bocom International estimates that the revenue for the first month of 'Three Kingdoms: Plan to Conquer the World' sales (estimated for 30 days) can reach 500 to 800 million yuan. Assuming an amortization of revenue for 9 months and based on a normalized monthly revenue of 2.3 billion yuan, it is expected that this game will contribute revenue of 800 million to 1.3 billion yuan in 2024.

Furthermore, Bocom International pointed out that the upcoming new game 'Tianqiong in Flames' is expected to provide better new game revenue contribution than expected and that game revenues in the second half of the year are expected to accelerate growth, driving a 12% to 20% increase in full-year game revenues, exceeding the market's current expectation of a low to mid-single-digit increase.

On the other hand, in March of this year, Bilibili's Chairman and CEO, Chen Rui, mentioned the profit target and expected that the adjusted operating profit would turn positive in the third quarter of 2024.

As one of the highlights of Bilibili's performance growth, the gaming business has attracted much attention from the market. The performance of the new game release for gaming has exceeded expectations, not only boosting market sentiment, but also increasing market anticipation for the company's subsequent performance turning point.

In addition, Bank of America Securities has also adjusted its forecast for Bilibili's compounded growth rate for 2025 to 2030, raising it from 26% to 27%. Bank of America said that the recent growth of new games and advertising business launched by Bilibili has also provided bullish signals for its future development.

Edited by Jeffrey