Bilibili Inc. – Rapid user expansion lays fast revenue growth September 4, 2019 189

  • Bilibili reported 2Q19 net revenue of RMB 1537.7mn, up 50% YoY, of which live broadcasting and VAS increased 175% YoY to RMB 326mn.
  • 2Q19 MAUs reached 110.4 million; mobile MAUs reached 96.2 million, representing an increase of 30% YoY and 35% YoY, respectively.
  • Average MPUs reached 6.3 million, up 111% YoY.
  • We are positive on Bilibili due to positive industry outlook, ever-growing supply of PUGC, highly engaged and sticky communities, and improving monetisation ability. Bilibili currently trades at P/B of 4.6.

 

Company Description:

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.

 

Why we like Bilibili:

Generation Z to further boost positive Industry outlook. According to Bilibili’s research, Generation Z (who was born from 1990 to 2009) served as the key driving force of China’s online entertainment market. Generation Z accounted for more than 48% of the total online population in China in 2018 and contributed 55% of China’s online entertainment market revenue.

Based on Bilibili’s forecast, China’s online entertainment market revenue is likely to reach RMB 678.7bn in 2020. With Generation Zs’ advantages in 1) deep user penetration 2) extensive time spent online and 3) strong willingness to pay in online entertainment market; Generation Z will contributes for more than 60% of the total market size in 2020.

Ever-growing supply of PUGC helps create a sticky and engaging community. Bilibili has become a well-known online video website of diverse interests, especially in lifestyle and ACG content. In 2Q19 number of MAACC increased 144% YoY to 854,000, creating more than 2 million videos every month, representing an increase of 107% YoY.

With the ever-growing supply of contents, Bilibili reached historical high daily average video views of 586 million and 1.8 billion interactions in 2Q19, representing an 84% and 180% YoY growth YoY respectively. Interactive features include bullet chat, commentaries, following, favourites, sharing, Bilibili moment posts, virtual gifting.  

Improving monetisation ability. Bilibili’s monetisation model is to convert its online video users with certain characteristics to paying users in diversified online entertainment verticals. As the users on Bilibili are mostly young people interested in ACG contents, mobile games, video membership fees and live streaming become major sources of revenue. Despite 2Q19 MAUs of 110.4 million (representing an increase of 30% YoY) average MPUs grew faster by 111% YoY, reaching 6.3 million. Also, with large and highly engaged user traffic, advertising becomes another income stream. Revenues from advertising were RMB167.7 million, representing an increase of 75% YoY.

 

Recommendation

Overall, we are positive on Bilibili due to 1) positive industry outlook 2) ever-growing supply of PUGC 3) highly engaged and sticky communities 4) improving monetisation ability,  Bilibili currently trades at 4.6 P/B.

 

Technicals:

Periods = 14

Red line = 60 Overbought line

Green line  = 40 Oversold line

 

Relative Strength Index

Support 1: 13.23                     Resistance 1: 15.36

                                                   Resistance 2: 16.88

 

Bilibili (BILI)’s current price action suggests that the stock is currently range bound. However, the stock may enter into a bullish breakout based on the technicals indicated below:

  • Bullish closure above the 88.6% of the Fibonacci retracement level.
  • Falling wedge formation suggests a potential bullish reversal signal.
  • RSI showing bullish divergence.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!