Bilibili Shares Rise on Tech Buying
By Kimberley Kao
Bilibili's shares were sharply higher in Hong Kong trading, lifted by risk-on appetite for technology stocks.
Shares of the Chinese video-streaming company were up 12% Monday afternoon at HK$93.00 (US$11.89), paring year-to-date losses to 0.3%.
Gains came as investors piled into Chinese internet names, lifting the Hang Seng Tech Index to a 2.8% gain against the benchmark index's 1.3% rise. JD.com and Meituan rose 6.9% and 5.4%, respectively.
Bocom International on Monday kept a buy rating on Bilibili, citing expectations that new titles could boost game revenue growth in the second half. Analyst Li Zhao said in a research note that advertising revenue "may maintain healthy growth on increase of ad inventory/construction of e-commerce related ecosystem."
Bilibili last week reported a rise in quarterly revenue on the back of better advertising and livestreaming performance, and said it expects to break even at the operating level in the third quarter.
Not everyone is bullish on shares given weakness in the company's online-games business, a segment that accounted for nearly a fifth of revenue in 2023.
Citi analyst Brian Gong downgraded his rating on Bilibili's American depositary receipts to neutral from buy, saying in a research note that "decent momentum" in livestreaming operations is unlikely to spark much optimism overall given the regulatory environment, coupled with the lackluster performance seen in gaming. Gong lowered his target price on the ADRs to US$12.50 from US$18.00 to reflect a likely softer performance for the gaming unit.
Nomura analysts Jialong Shi and Rachel Guo said the gaming business remains a "weak link."
"We [have] yet to see a possible inflection on the horizon for its gaming business," they wrote in a research note. Nomura kept a neutral rating on the ADRs and lowered its target price to US$11.80 from US$13.00, reflecting a lower 2024 revenue forecast for the unit.
Jefferies analysts wrote in a note that they expect a "positive virtuous cycle" for Bilibili due to user growth and projected profitability "backed by quality content." The company did well in executing the diversification of its revenue stream to non-gaming units such as advertising, which will be a key growth driver for 2024, the analysts said.
Jefferies said that revenue growth for the company's gaming unit will be dependent on the release of new titles, but noted that overall, Bilibili should be well-placed to "capture the long-term trend in the Gen Z entertainment market."
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
March 11, 2024 04:24 ET (08:24 GMT)
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