哔哩哔哩-SW(09626.HK)季报点评:亏损持续收窄 广告重回增长

Bilibili-SW (09626.HK) Quarterly Report Review: Losses Continue to Narrow, Advertising Returns to Growth

國盛證券 ·  06/04  · Researches

Bilibili's 2023Q1 losses continued to narrow. Bilibili's 2023Q1 revenue was 5.07 billion yuan, an increase of 0.3% over the previous year. Among them, value-added services, advertising, games, IP derivatives and others were RMB 21.6/12.7/11.3/51 billion respectively, with year-on-year changes of 5%/22%/-17%/-15%.

Q1 The company continued to reduce costs and increase efficiency, and losses narrowed. Gross margin increased 5.8 pct to 21.8% year over year. The cost of sales ratio was 17.4%, a sharp decrease of 7.4 pct from the previous year. The net loss returned to the mother after the Q1 adjustment was about 1.03 billion yuan, a year-on-year decrease of 38%. The adjusted loss rate for returning to the mother was -20.3%, a sharp decrease of 12.4 pct from the previous year.

Focus on the quality of users, and the creative ecosystem is stable. In terms of creative ecology, as of Q1, the average number of active users increased by 42%, with an average monthly submission volume of 22.5 million, an increase of 79%. The number of main items that have been increased by more than 10,000 powder has also increased by 48%. In Q1, a total of 1.5 million creators earned revenue from Station B, an increase of 50%. In terms of content composition, Q1 PUGV videos accounted for 95%.

On the OGV side, on May 10, Station B held the 2nd Documentary Conference to release 36 documentary works.

In terms of user growth, Station B focuses on user quality and emphasizes DAU growth. Sales expenses in Q1 fell 30% year over year, but DAU increased 18% year over year to 93.7 million, and the DAU/MAU ratio increased to 29.7%, up 1.3 pct from month to month. The quality of users has improved: in terms of activity, the average number of daily video views was 4.1 billion, an increase of 37%, the average number of monthly interactions was 14.2 billion, an increase of 15%, and users spent 96 minutes in a single day. In terms of retention, the 12-month retention rate for regular members reached 80%. In terms of payment, Q1 MPU reached 28.5 million people, an increase of 15% over the same period, and the billing rate was 9%.

Advertisement: Resume rapid growth and focus on “one horizontal and one vertical”. Q1 The company's advertising revenue increased 22% year over year, with performance advertising revenue increasing nearly 50% year over year. The average number of Q1 story mode video views per day increased by more than 82% year over year, and vertical screen ads showed high eCPM and high conversion efficiency. In the future, Station B advertisements will focus on “one horizontal and one vertical”. “Horizontal” means focusing on the technical and data capabilities of China and Taiwan to improve advertising efficiency. Includes: 1) Algorithmic capabilities, continuous attention to the coverage of deep transformation. 2) Increase commercial traffic and include user commercial behavior indicators in traffic strategies. 3) Data construction to establish a scientific marketing methodology. 4) Improve the efficiency of advertising operations and conversion through AIGC.

“One vertical” refers to the construction of six key vertical industries to accurately match the advertising models of different industries at Station B. We expect Q2 advertising growth to accelerate month-on-month as advertiser budgets recover and are driven by the 618 promotion.

Promote the integration of live streaming and video ecosystems, and have an adequate game pipeline. In terms of live streaming, Station B promoted the integration of live streaming and video ecosystems. The average number of active anchors in Q1 increased by 34%, the number of people who were UP hosts and anchors at the same time increased 38% year-on-year in Q1, and 90% of the new anchors came from UP hosts and regular users. Subsequent live broadcasts will optimize the division mechanism to increase gross profit margins. We expect value-added services to continue growing healthily in Q2.

In terms of gaming, the intermodal transport games “Crash: Stardom Railroad” and “Back to the Future: 1999” have performed well recently. In terms of Pipeline, at present, 8 domestic games on Station B have received version numbers, and 5 games will be distributed overseas. Looking forward to the next blockbuster agent game “Shine! “The Handsome Girl” and the self-developed games “Shake It Up” and “Sloud” are online.

We expect Q2 to resume growth in the second half of the year due to the natural decline in game stock and continued pressure on game revenue.

Investment advice: Maintain an “increase in holdings” rating. We expect the company's revenue to reach 245/289/33.2 billion yuan in 2023-2025, an increase of 12%/18%/15% over the previous year; the net profit of non-GAAP to the mother is 34/-0.1/17 billion. Bilibili Hong Kong stock (9626.HK) was given a target price of HK$143 /US stock (BILI.O) of $18, corresponding to 2.2 x 2023 Ep/s, maintaining the “increase in holdings” rating.

Risk warning: User growth falls short of expectations, monetization efficiency falls short of expectations, and changes in the macro environment have exceeded expectations.

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