The average target price of BILI is 26 and suggests 18% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 36.3. This translates into 62% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 18.3. This is equivalent to 18% downside potential in the worst case. 

Bilibili Inc. provides online entertainment services for the young generations in the People's Republic of China. Its platform offers a range of content, including video services, mobile games, and value-added service, as well as ACG-related comic and audio content. The company's video services include professional user generated videos, occupationally generated videos, and live broadcasting. Bilibili Inc. was founded in 2009 and is headquartered in Shanghai, the People's Republic of China.

China

Bilibili Inc.

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

BILI reported revenue of CNY 28 170mn in the last 12 months, up 5% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 55% from FY24 to CNY -1.45. Market expects EPS to reach CNY -0.19 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 30ppts and its growth accelerated by 1ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 3.1% in the last 12 months, up from -14.8% in FY23. 

Historically, BILI has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -2.2%, a growth from -21.4% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -1.8% in the last 12 months, an increase from -12.9% in FY23. The market analysts predict that RoA will be -0.3% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to -3.7%, below the peers. The consensus estimate for FY24 for RoCE is -0.9%, again behind the peers. 

Bilibili Inc. reported a return on equity (RoE) of -4.2% in the last 12 months, up from -32.6% in FY23. The market consensus projects an RoE of -0.7% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.7 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

BILI boasts high trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually quite stable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note low margin volatility and solid cash flow generation, among the positive credit factors. Among the negative credit factors, we point to bleak profitability, negligible return on capital, and inadequate interest coverage.

In highly turbulent market conditions, BILI is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, BILI is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

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Bilibili Inc.

$ 22.32

2

Bilibili Inc.

$ 22.32

2

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Risk factor

Profitability factor

$ 22.32

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