哔哩哔哩（BILI）：由人工智能驱动的用户体验和货币化

2023A2024A2025E2026E22,528.026,832.030,069.032,782.0(3,425.0)(22.0)1,835.02,827.0 Thomas Chong * | Equity Analyst852 3743 8016 | thomas.chong@jefferies.comZoey Zong * | Equity Analyst852 3743 8163 | zoey.zong@jefferies.com The Long View: BILIInvestment Thesis / Where We Differ•We expect Bilibili to create a vibrant ecosystem centered on ACG witha significant pool of users and content creators, together with its solidexecution in diversifying revenue streams to non-game segments in live-streaming and VAS as well as advertising.•With support from Tencent and Alibaba, Bilibili looks well-positioned tocapture the long-term trend in the Gen Z entertainment market acrosscontent, community, and commercialization.Base Case,$29.00, +61%•The number of monthly active userscontinues increasing.•BILI showcases its capabilities in self-produced variety shows, capturing audienceeyeball share.•PT of US$29/HK$224 based on Price-to-Salesvaluation.Sustainability MattersTop Material Issue(s): 1)Intellectual property protection is inherent to the business model ofcompanies in the Internet Media & Services industry and is an important driver of innovation.2)Privacy protection is crucial for users, content creators, and related parties.3)Supplier ESGmanagement is important, and the company should continuously ensure quality suppliers and stablesupply chain operation.Company Target(s): 1)Keep investing in product and technology innovations to bring quality,innovative products to users and protect achievements by a comprehensive intellectual propertymanagement system.2)Implement full-on user privacy protection in accordance with laws,regulations, ordinances, and industry standards as well as self-established eight principles of privacyprotection. 3)Implement risk management measures, strict supervision and rigorous examination inthe full-lifecycle of suppliers.Qs to Mgmt: 1)What areas can be further improved to strengthen privacy protection?2)What is thetrend of R&D expense on technology innovations?Please see important disclosure information on pages 6 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,$34.80, +93%•Faster-than-expected user growth.•Earlier-than-expected profitability timeline.•Better-than-expected live-streaming and VASrevenue growth.•PT of US$34.8/HK$268.8 based on Price-to-Sales valuation. Downside Scenario,$17.40, -3%•Competition from new entrants that arebigger in scale and have significant capitalresources.•Slower-than-expectedgames.•More stringent regulations on contentrectifications.•PT of US$17.4/HK$134.4 based on Price-to-Sales valuation.Catalysts•Stronger than expected performance by newlylaunched mobile games.•Stronger than expected user growth.•Lower than expected gross margin pressurefrom content investment strategy to enhanceuser engagement and attract new users. growthinmobile2 (4) BILI emphasizes long-term operation strategy for San Mou, targeting its lifecycle to be over5 years. The game achieved record DAUs upon the launch of Season 7. Upcoming Season 8together with anniversary event is expected to be a milestone to San Mou; (5) Updates on SanMou focuses on a) it will launch a traditional Chinese version for HK/Macau/Taiwan by yearend and b) the rollout of mini-game version coming summer; (6) it announced 4-5 new gamespending approval in future.In addiiton, BILI is exploring new genres to broaden portfolio; (7) Theaverage user age is 26, indicating higher disposable income and diversified consumption needsbeyond entertainment, which brings higher advertising potential; (8) AI and LLM technology canhelp better understand users’ interest and purchase intent, boosting conversion efficiency; (9)Improved AIGC tools help advertisers produce high-quality content. There are about 30% ofperformance ads generated by AIGC; (10) Game is still the top vertical in advertising business,followed by internet services, ecommerce, digital products and home appliances; (11) GPMimprovement in Q1 due to a) revenue mix shift toward high margin business like advertising andgaming and b) content cost remained flat in absolute terms and declined as a % of revenue from25% to 20%; (2) Long-term targets remain that GPM of 40–45%, and operating margin of 15–20%Valuationand risks.We maintain our Buy rating and adjust PT of USD29/HKD224(prior USD28.6/HKD222), factoring in the latest developments post-results. Risks include 1)unsuccessful release of new titles; 2) slower-than-expected user growth; and 3) aggressivemarketing spending, with less focus on ROI.Please see important disclosure information on pages 6 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 1 - BILI US: Income Statement.Income Statement (BILI US)RMB mnTotal RevenueYoY % changeCost of revenueGross profitGross marginOperating ProfitYoY % changeOperating marginNet IncomeYoY % changeNet marginNon-GAAP net incom