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

Thematic (Sector/Industry)

<ul>
<li>We recently conducted a round of interviews of Chinese start-up gaming companies, and we see an overall loosening in the regulatory environment, although near-term hit titles are still absent.</li>
<li>We are positive on Tencent because of the increasing possibility of DNF mobile launch. We raise NetEase’s TP to US$ 99, and it’s one of our top picks now</li>
<li>Other gaming companies that have upward trends include Kingsoft, Lingxi Games (under Alibaba), Koei Tecmo, Nexon, and Mihoyo. Companies with a downward trend include BILI and Garena (under SEA).  </li>
</ul>


We recently conducted a round of interviews of Chinese start-up gaming companies, and we see an overall loosening in the regulatory environment, although near-term hit titles are still absent.
We are positive on Tencent because of the increasing possibility of DNF mobile launch. We raise NetEase’s TP to US$ 99, and it’s one of our top picks now
Other gaming companies that have upward trends include Kingsoft, Lingxi Games (under Alibaba), Koei Tecmo, Nexon, and Mihoyo. Companies with a downward trend include BILI and Garena (under SEA).  


[Gaming Sector Update]: Top Picks Are Tencent and NetEase, Positive to Kingsoft, Koei Tecmo, Nexon.

<ul>
<li>We recently conducted a round of interviews of several major Chinese online advertising agencies. We conclude that there has been slower-than-expected recovery in February.</li>
<li>Among major advertisers, travel, local service, medical service, and eCommerce have better performances. Gaming, automobile, and FMCG remain weak.</li>
<li>Tencent is still our top pick; maintain BUY to Baidu and Weibo; SELL to Kuaishou and BILI</li>
</ul>


We recently conducted a round of interviews of several major Chinese online advertising agencies. We conclude that there has been slower-than-expected recovery in February.
Among major advertisers, travel, local service, medical service, and eCommerce have better performances. Gaming, automobile, and FMCG remain weak.
Tencent is still our top pick; maintain BUY to Baidu and Weibo; SELL to Kuaishou and BILI


Tencent, Baidu, Weibo, Kuaishou and Bili: Online Ads Show Slow Recovery Trend

Equity Bottom-Up

<ul>
<li>BILI's 4Q22 top line was basically in line, while non-GAAP net loss beat cons. by 8.28%. We largely dial down 2023 revenue forecast. </li>
<li>Moreover, we also suggest that recent meeting by the National Radio and Television Administration (NRTA) to curb short video addiction for minor protection would heavily impact BILI.</li>
<li>Maintain SELL and cut TP to US$ 15.4, which implies 1.85X PS in 2023.</li>
</ul>


BILI's 4Q22 top line was basically in line, while non-GAAP net loss beat cons. by 8.28%. We largely dial down 2023 revenue forecast. 
Moreover, we also suggest that recent meeting by the National Radio and Television Administration (NRTA) to curb short video addiction for minor protection would heavily impact BILI.
Maintain SELL and cut TP to US$ 15.4, which implies 1.85X PS in 2023.


[Bilibili Inc. (BILI US) Target Price Change]: Minor Protection Would Be a Pending Issue

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Bilibili reported 4Q2022 results. Net revenue increased 6.2% YoY to RMB6,142m (vs consensus RMB6,154m) while operating losses expanded to RMB2,327M (vs consensus RMB1,905.9m).</li>
<li>Mobile Games revenues declined 11.5% YoY in 4Q2022 due to the restructuring of the games biz to focus on self-developed gaming titles.</li>
<li>We expect Bilibili’s earnings to remain under pressure with aggressive cost controls to impact growth and Mobile games to slow-down in 2023E with lack of new titles for launch.</li>
</ul>


Bilibili reported 4Q2022 results. Net revenue increased 6.2% YoY to RMB6,142m (vs consensus RMB6,154m) while operating losses expanded to RMB2,327M (vs consensus RMB1,905.9m).
Mobile Games revenues declined 11.5% YoY in 4Q2022 due to the restructuring of the games biz to focus on self-developed gaming titles.
We expect Bilibili’s earnings to remain under pressure with aggressive cost controls to impact growth and Mobile games to slow-down in 2023E with lack of new titles for launch.


Bilibili 4Q: Gaming to Drop Further with In-House Developed Strategy

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>BILI's 4Q results missed expectations across key metrics from revenue and MAU growth to guidance for 2023</li>
<li>The results suggest fast growth will not return in 2023 and an uncertain road to breakeven by 2024.</li>
<li>Reiterate our bearish view on the stock and see further downside risks ahead.</li>
</ul>


BILI's 4Q results missed expectations across key metrics from revenue and MAU growth to guidance for 2023
The results suggest fast growth will not return in 2023 and an uncertain road to breakeven by 2024.
Reiterate our bearish view on the stock and see further downside risks ahead.


Bilibili (Bili Us): Further Downside Risks Ahead

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)

[Gaming Sector Update]: Top Picks Are Tencent and NetEase, Positive to Kingsoft, Koei Tecmo, Nexon.

We recently conducted a round of interviews of Chinese start-up gaming companies. Our top picks are Tencent and NetEase. We are also positive to...

Blue Lotus Research Institute

Tencent, Baidu, Weibo, Kuaishou and Bili: Online Ads Show Slow Recovery Trend

We recently conducted a round of interviews of several major Chinese online advertising agencies. We conclude that there has been slower-than...

Blue Lotus Research Institute

[Bilibili Inc. (BILI US) Target Price Change]: Minor Protection Would Be a Pending Issue

BILI's 4Q22 top line was basically in line with our est., while non-GAAP net loss was in line with our est., and beat cons. by 8.28%. We largely...

Blue Lotus Research Institute

Bilibili 4Q: Gaming to Drop Further with In-House Developed Strategy

Bilibili's 4Q earnings were disappointing with mobile games declining. Terminating underperforming gaming titles alone is not sufficient as the...

Shifara Samsudeen, ACMA, CGMA

Bilibili (Bili Us): Further Downside Risks Ahead

Disappointing 4Q results highlights the outlook of low growth and limited room for margin improvement. We see further downside risks ahead.

Eric Chen

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