Morgan Stanley raises Bilibili's target price to 210 yuan, positive advertising growth

JP Morgan's research report indicates that Bilibili (09626.HK) maintained a robust year-on-year growth of 23% in advertising revenue for the third quarter, benefiting from an increase in advertising clients. During the Double Eleven period in the fourth quarter, advertising revenue also grew by 30% year-on-year. Although sales and management expenses decreased year-on-year in the third quarter, the daily active users still showed a healthy year-on-year growth of 9%, reflecting the attractiveness of the content; the number of paid members grew by 16% year-on-year driven by high-quality self-produced content. The operating profit margin also expanded further from 7.8% in the second quarter to 9% in the third quarter.

However, the firm maintains a "Neutral" rating, believing that its strong earnings growth prospects are already fully reflected in the current valuation. At the same time, the firm holds a cautious attitude towards the gaming revenue outlook, expecting that "Three Kingdoms: Strategizing the World" will face more intense competition in 2026, and is also reserved about the revenue potential of "Three Kingdoms: Battle Card."

The firm believes that to drive a revaluation of the stock price, revenue growth needs to rebound to above 10%; it has recently raised the target price for Bilibili's Hong Kong stock from HKD 185 to HKD 210, and the target price for Bilibili (BILI.US) in the U.S. stock market from USD 24 to USD 27