Lyon expects Bilibili (BILI.US) (09626.HK) to deliver solid third-quarter performance, benefiting from the turnaround in gaming business and strong growth in advertising. The bank expects the company's quarterly revenue to increase by 27% year-on-year to 7.4 billion RMB, and the adjusted Earnings Before Interest and Taxes (EBIT) to turn positive to 0.181 billion RMB.

Driven by the popular Three Kingdoms themed games, the bank expects the company's quarterly gaming revenue to nearly double year-on-year, with the game consistently ranking in the top ten of China's gaming revenue chart. Advertising revenue is projected to increase by 28% year-on-year, benefiting from the increase in gaming market share, as well as growth in advertising spending for electronic products and e-commerce. The bank expects the company's business momentum to continue into the fourth quarter, with fourth-quarter revenue expected to increase by 38% year-on-year and profit growth.

The bank raised its adjusted net profit forecast for the company for next year and the following year by 8% to 10%, and raised the ADR target price from $16.8 to $25, maintaining an 'Outperform' rating.