Bilibili-W (09626.HK): Gaming business is expected to improve quarter by quarter

方正證券 ·  06/04  · Researches

Performance summary:

On June 1, the company released 23Q1 results, with revenue of 5.1 billion yuan, +0.3% year on year, net loss of 630 million yuan, a year-on-year decrease of 72%, adjusted loss of 1 billion yuan, a year-on-year decrease of 38%, in line with expectations.


Highlight 1: A highly sticky user ecosystem may unleash commercialization potential. In Q1 of 2023, Station B maintained a community ecosystem with high participation, high interactivity and high stickiness. The number of daily active users increased 18% year over year to 93.7 million, and the average daily usage time of users was 96 minutes; on the supply side, the number of daily active content creators increased 42% year over year, and monthly content submitted increased 79% year over year. A highly sticky user ecosystem and highly active content creators may bring potential for commercialization.

Highlight 2: The growth rate of advertising revenue outperforms the market, and “618” will also drive Q2 sales. The company's advertising revenue this quarter was 1.3 billion yuan, an increase of 22% over the previous year, outperforming the industry's overall -4.5%, reflecting the continuous increase in market share. With the optimization of advertising products on Site B, advertising efficiency improved, and the role of the platform's high-quality user groups and mental influence was gradually recognized. We believe that Q2 coincides with the “618” e-commerce launch window. The company has always had a foundation of deep cooperation with leading e-commerce platforms such as Ali, JD, and Pinduoduo, and demand for e-commerce platforms has also recovered rapidly. For example, advertising revenue in the Q1 e-commerce industry grew more than 110% year on year, and e-commerce advertising revenue is expected to increase 3-4 times over the same period during the “618” period.

Highlight 3: A number of games were launched during the summer season, and segment performance is expected to improve quarter by quarter. In Q1 2023, the company's game business revenue was 1.1 billion yuan, a year-on-year decline, which was basically the same from month to month, mainly due to the high revenue of 22Q1 and the lack of new games this quarter. As the supply of domestic editions increases, the company's distribution and reserve product performance is expected to be realized quarterly. For example, Q2 “Crash: Star Dome Railroad” had more than 2.8 million downloads on the first day of its launch; entering the Q3 summer program, the company will launch the agency game “Shine! “The Handsome Girl”, the self-developed games “Shake It Up”, and “Sloud”, including “Shine! “Beautiful Girl” was launched in Japan in February '21. After more than 2 years, it is still in the top 20 of the iOS bestsellers list in Japan, and has been at the top of the list many times. It was launched in Hong Kong, Macao, and Taiwan in April 22, and has been at the top of the bestseller list many times.

Profit forecast: We expect the company's revenue for 2023/2024/2025 to be 252/299/347 billion yuan respectively, net profit of -45.9/-238/48 billion yuan respectively, and net profit of -37/-13/1.2 billion yuan respectively under the adjusted caliber, maintaining the “highly recommended” rating.

Risk warning: The flow of new games fell short of expectations, demand in the advertising market was insufficient, and platform users fluctuated.

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