We expect BILI to report 4Q24 results at end Feb 2025. We estimate an inline 21% YoY topline driven by solid 79% YoY mobile game and 24% YoY online ad. Forecasted +6.1% adj. NPM slightly beat consensus. We deem Co. will continue to grow users and diversify user profiles (low tier, middle-aged and elderly generations), enrich content across various verticals, enhance monetisations with good margin profile and optimise technologies to generate sustainable topline and profitability growth. We change our valuation from PS to PEG. Maintain BUY and TP of US$22.0/ HK$172.0.
　　Key Factors for Rating
　　Enhanced ROI-oriented monetisations; RMB100m additional S&M in 1Q25 for ‘Snake CCTV CNY gala’ procurement. We deem Co. will i) grow users especially low tier, middle-aged and elderly generations; ii) engage users with enriched content across diverse verticals amid vibrant interactive community with tools; iii) enhance ROI-oriented monetisations; and iv) optimise algorithm and upgrade technology after generating sustainable profitability. We expect game and ad will maintain healthy growth momentum and continue to be main growth engines along the road. We raise our 2025/26E mobile game estimates by 8%/ 20% to reflect our higher annual SLG game forecasts (RMB3.8bn/RMB3.5bn in 2025/ 2026 respectively) and new casual game expected to launch in 2H25. Although we increase our 2025-26E opex assumptions, our forecasted 2025/26E adj. EPADS raise by 8%/ 6% due to higher estimated GPM on revenue mix and improved cost efficiency. We estimate 2025/26E adj. operating profit to reach RMB2.0bn and RMB3.0bn respectively.
　　4Q24 preview: inline topline on solid SLG game and ad. We model total revenue to grow at 21% YoY to RMB7.7bn, in line with consensus. Strong mobile game revenue delivers 79% YoY to RMB1.8bn driven by forecasted RMB1.25bn ‘SanMou’ revenue booked in 4Q24. Online ad revenue remains solid at 24% YoY growth to RMB2.4bn. VAS revenue displays 5% YoY growth to RMB3.0bn.
　　Forecasted GPM continues to expand significantly by 9.9ppts YoY/ 1.2ppts QoQ to 36.1%. We estimate adj. operating profit to reach RMB424m, leading to 6.1% adj. NPM, above consensus of 5.2%.
　　Key Risks for Rating
　　Downside: (i) slower-than-expected macro recovery; ii) ineffective monetisation; (iii) content creator and user engagement; (iv) content supply and quality; and (v) regulations on games, streaming, advertising, data collection, taxation, etc.
　　Valuation
　　We change our valuation from PS to PEG. Maintain BUY and new PEG based TP of US$22.0/ HK$172.0 on 0.7x 2025E PEG ratio, 45% 2025E-27E adj. operating profit CAGR and US$0.67 2025E adj. EPADS. This implies 32x/ 22x 2025/26E adj. PER.