Key Takeaways:
BOCI reiterated its “Buy” rating on Bilibili Inc. (09626.HK), setting a price target of HK$244 for its Hong Kong-listed shares and US$31 for its US-listed stock, even as the market weighs the risk of a potential stake sale by Tencent Holdings.
"We believe the company will rely on healthy user growth driven by its AI-empowered content and commercialization ecosystem, generating stable and sustainable profit growth," a BOCI report said, addressing the recent decline in Bilibili's share price.
The bank’s price target implies a 59% upside from Bilibili's recent closing price. The bullish forecast is underpinned by a projected 31% compound annual growth rate (CAGR) in adjusted net profit for the period of 2025 to 2028. BOCI's positive stance comes despite market anxiety over Tencent's 10.5% stake, which it has held since 2019. Tencent has previously indicated it plans to sell down its large investment portfolio.
The primary risk highlighted by the market is the potential for Tencent to divest its holding of approximately 43.75 million shares. Such a sale could create significant selling pressure on Bilibili's stock. BOCI acknowledged it cannot predict the timing of any potential stake reduction but emphasized Bilibili's solid fundamentals.
The bank pointed to a healthy cash flow position and stable internal cash inflows, with no significant or unexpected capital expenditure related to AI expected.
BOCI expects Bilibili’s advertising business to maintain strong momentum in the coming quarters. The bank also anticipates an acceleration in the gaming segment's growth starting in the second half of the year, driven by the official launch of several new titles. These factors are projected to lead to better-than-expected profitability in 2026 and 2027.
The positive outlook on core business segments forms the basis for BOCI's conviction, suggesting that long-term operational performance could outweigh the short-term risks associated with Tencent's potential exit. Investors will be closely watching the launch of new game titles in the second half as the next major test of this growth thesis.
This article is for informational purposes only and does not constitute investment advice.
