China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. </li>
<li>However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.</li>
<li>We maintain a SELL rating, and investors may consider shorting BILI after &lt;Uma Musume&gt; is launched.</li>
</ul>


We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. 
However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.
We maintain a SELL rating, and investors may consider shorting BILI after &lt;Uma Musume&gt; is launched.


[Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We attended BiliBili (Bili) 2023 investor day on 22 Jul. Our key takeaways are: 1) overall strategy: emphasizing healthy content ecosystem development and commercialization, which are the two pillar drivers for its business development;</li><li>2) ads: to further expand ad inventory, improve e-commerce ecosystem and enhance tech capabilities;</li><li>3) games: focusing on top-tier games in specific genres with long product life cycle and global launch potential</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We attended BiliBili (Bili) 2023 investor day on 22 Jul. Our key takeaways are: 1) overall strategy: emphasizing healthy content ecosystem development and commercialization, which are the two pillar drivers for its business development;2) ads: to further expand ad inventory, improve e-commerce ecosystem and enhance tech capabilities;3) games: focusing on top-tier games in specific genres with long product life cycle and global launch potentialContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bilibili (BILI US) – Commercialization and Content Ecosystem Drive Business Growth

<ul>
<li>We cut our revenue estimations for 2H23, mainly due to increased uncertainty surrounding the launch of "Uma Musume." </li>
<li>We also lower our estimations for live streaming due to concerns about macro factors. We slightly raise our estimations for BILI's advertising business...</li>
<li>...as we anticipate that it will benefit from gaming and e-commerce. Our rev./non-GAAP net income are 1.0% and (6.4%) vs cons in 2Q23. Cut TP to $12.3, maintaining "Sell" rating.</li>
</ul>


We cut our revenue estimations for 2H23, mainly due to increased uncertainty surrounding the launch of "Uma Musume." 
We also lower our estimations for live streaming due to concerns about macro factors. We slightly raise our estimations for BILI's advertising business...
...as we anticipate that it will benefit from gaming and e-commerce. Our rev./non-GAAP net income are 1.0% and (6.4%) vs cons in 2Q23. Cut TP to $12.3, maintaining "Sell" rating.


[Bilibili (BILI US, SELL, TP US$12.3) TP Change]: The Launch Of "Uma Musume" May Face More Delay

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>Further evidence of BILI’s user base peaking reinforces our bearish view on its growth outlook.</li>
<li>BILI’s business model is broken and we believe significant downsizing is unavoidable in the next 12- 18 months to achieve profitability.</li>
<li>The company will survive as a leaner and slightly profitable business valued at high single-digit P/E. We still see tremendous downside from here and advise investors to avoid the stock.</li>
</ul>


Further evidence of BILI’s user base peaking reinforces our bearish view on its growth outlook.
BILI’s business model is broken and we believe significant downsizing is unavoidable in the next 12- 18 months to achieve profitability.
The company will survive as a leaner and slightly profitable business valued at high single-digit P/E. We still see tremendous downside from here and advise investors to avoid the stock.


BILIBILI (BILI US): Cracks in Business Model

<ul>
<li>BILI reported 1Q23 revenue/non-GAAP net income (4.2%)/in-line vs. our estimate, but BILI’s suggested 2Q23 revenue and gross margin are (10%) and (3.5ppts) lower vs. our prior est.; </li>
<li>Gaming will be BILI’s major swing factor.  Although BILI indicated that 2Q23 gaming revenue could decline 10% YoY, we expect that gaming revenue will still grow 6%~ YoY in 2023.; </li>
<li>We maintain SELL rating and cut TP to US$ 14.1. 1Q23’s earning indicates that BILI’s cost saving measures have led to declining MAU.</li>
</ul>


BILI reported 1Q23 revenue/non-GAAP net income (4.2%)/in-line vs. our estimate, but BILI’s suggested 2Q23 revenue and gross margin are (10%) and (3.5ppts) lower vs. our prior est.; 
Gaming will be BILI’s major swing factor.  Although BILI indicated that 2Q23 gaming revenue could decline 10% YoY, we expect that gaming revenue will still grow 6%~ YoY in 2023.; 
We maintain SELL rating and cut TP to US$ 14.1. 1Q23’s earning indicates that BILI’s cost saving measures have led to declining MAU.


BILI US, SELL, TP US$14.1, Target Price Change: Thriving Gaming Market Makes Limited Contribution

China

Bilibili Inc. provides online entertainment services. The Company offers a platform that covers a wide array of genres and media formats, including videos, live broadcasting, mobile games, animation, and comics. Bilibili serves customers in China.

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Bilibili (BILI US)

[Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization

We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. Most of these catalysts appear to be minor....

Blue Lotus Research Institute

Bilibili (BILI US) – Commercialization and Content Ecosystem Drive Business Growth

We attended BiliBili (Bili) 2023 investor day on 22 Jul. Our key takeaways are: 1) overall strategy: emphasizing healthy content ecosystem...

CMB International

[Bilibili (BILI US, SELL, TP US$12.3) TP Change]: The Launch Of "Uma Musume" May Face More Delay

We cut our revenue estimations for 2H23, mainly due to increased uncertainty surrounding the launch of "Uma Musume." Our rev./non-GAAP net income...

Blue Lotus Research Institute

BILIBILI (BILI US): Cracks in Business Model

BILI's business model is broken and the odds are high for a downsizing in its attempt to achieve profitability. We still see tremendous downside to...

Eric Chen

BILI US, SELL, TP US$14.1, Target Price Change: Thriving Gaming Market Makes Limited Contribution

We maintain SELL rating and cut TP to US$ 14.1. 1Q23’s earning indicates that BILI’s cost saving measures have led to declining MAU.

Blue Lotus Research Institute

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