Bilibili Inc. (NASDAQ:BILI) Shares Could Be 24% Below Their Intrinsic Value Estimate

Simply Wall St.04-16

Key Insights Bilibili's estimated fair value is US$15.03 based on 2 Stage Free Cash Flow to Equity Bilibili is estimated to be 24% undervalued based on current share price of US$11.48 Analyst ...

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(NASDAQ:BILI) Shares Could Be 24% Below Their Intrinsic Value Estimate","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n Bilibili's estimated fair value is US$15.03 based on 2 Stage Free Cash Flow to Equity \n Bilibili is estimated to be 24% undervalued based on current share price of US$11.48 \n  Analyst ...</p>\n\n<a href=\"https://finance.yahoo.com/news/bilibili-inc-nasdaq-bili-shares-172308307.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Bilibili Inc. (NASDAQ:BILI) Shares Could Be 24% Below Their Intrinsic Value Estimate</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBilibili Inc. (NASDAQ:BILI) Shares Could Be 24% Below Their Intrinsic Value Estimate\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-16 01:23 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/bilibili-inc-nasdaq-bili-shares-172308307.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n Bilibili's estimated fair value is US$15.03 based on 2 Stage Free Cash Flow to Equity \n Bilibili is estimated to be 24% undervalued based on current share price of US$11.48 \n  Analyst ...</p>\n\n<a href=\"https://finance.yahoo.com/news/bilibili-inc-nasdaq-bili-shares-172308307.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"PSQ","symbol_name":"纳指反向ETF","start_time":0,"source_url":"https://finance.yahoo.com/news/bilibili-inc-nasdaq-bili-shares-172308307.html","article_id":"2427670881","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/NgcLLPr1LyOPReVucpZw9w--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/f03d17bfb9bd39baa89c6655dcfb03d3"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2427670881","pubTimestamp":1713201788,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Bilibili's estimated fair value is US$15.03 based on 2 Stage Free Cash Flow to Equity. Bilibili is estimated to be 24% undervalued based on current share price of US$11.48. Analyst price target for BILI is CN15.11 which is similar to our fair value estimate. Today we will run through one way of estimating the intrinsic value of Bilibili Inc.  by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow  model. It may sound complicated, but actually it is quite simple!We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"PSQ":"纳指反向ETF","BK4577":"网络游戏","NDAQ":"纳斯达克OMX交易所","QQQ":"纳指100ETF","QLD":"纳指两倍做多ETF","BILI":"哔哩哔哩","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","BK4526":"热门中概股","BK4588":"碎股","BK4566":"资本集团","BK4503":"景林资产持仓","BK4211":"区域性银行","FCF":"第一联邦金融","BK4505":"高瓴资本持仓","BK4510":"在线教育","SQQQ":"纳指三倍做空ETF","BK4504":"桥水持仓","BK4085":"互动家庭娱乐","BK4563":"昨日强势股","BK4509":"腾讯概念","BK4112":"金融交易所和数据","BK4548":"巴美列捷福持仓","BK4513":"直播概念",".IXIC":"NASDAQ Composite","TV":"墨西哥电视","BK4554":"元宇宙及AR概念","BK4531":"中概回港概念","QID":"纳指两倍做空ETF","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","BK4100":"有线和卫星","BK4585":"ETF&股票定投概念","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","TQQQ":"纳指三倍做多ETF"},"translate_title":"哔哩哔哩（纳斯达克：BILI）的股票可能比其内在价值估计低24%","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BILI":1,"TV":1,"NDAQ":1,"FCF":1,"DCF":1,".IXIC":1,"TQQQ":0.6,"SQQQ":0.6,"QQQ":0.6,"QLD":0.6,"QID":0.6,"PSQ":0.6,"NQmain":0.6,"MNQmain":0.6},"content_text":"Key Insights\n\n Bilibili's estimated fair value is US$15.03 based on 2 Stage Free Cash Flow to Equity \n Bilibili is estimated to be 24% undervalued based on current share price of US$11.48 \n  Analyst price target for BILI is CN¥15.11 which is similar to our fair value estimate \n\n Today we will run through one way of estimating the intrinsic value of Bilibili Inc. (NASDAQ:BILI) by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple! \n We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. \n Check out our latest analysis for Bilibili \n The Model \n We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: \n 10-year free cash flow (FCF) forecast \n\n\n\n\n2024\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n\n\n Levered FCF (CN¥, Millions) \n-CN¥575.4m\nCN¥1.07b\nCN¥2.84b\nCN¥3.17b\nCN¥3.42b\nCN¥3.63b\nCN¥3.82b\nCN¥3.98b\nCN¥4.12b\nCN¥4.25b\n\n\nGrowth Rate Estimate Source\nAnalyst x9\nAnalyst x8\nAnalyst x6\nAnalyst x1\nEst @ 7.87%\nEst @ 6.20%\nEst @ 5.03%\nEst @ 4.20%\nEst @ 3.63%\nEst @ 3.23%\n\n\n Present Value (CN¥, Millions) Discounted @ 8.9% \n-CN¥528\nCN¥900\nCN¥2.2k\nCN¥2.3k\nCN¥2.2k\nCN¥2.2k\nCN¥2.1k\nCN¥2.0k\nCN¥1.9k\nCN¥1.8k\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = CN¥17b\n We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.9%. \nTerminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = CN¥4.3b× (1 + 2.3%) ÷ (8.9%– 2.3%) = CN¥66b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= CN¥66b÷ ( 1 + 8.9%)10= CN¥28b\n The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is CN¥45b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of US$11.5, the company appears a touch undervalued at a 24% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. \n\n\n\n  NasdaqGS:BILI Discounted Cash Flow April 15th 2024\n \n\n The Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Bilibili as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.9%, which is based on a levered beta of 1.180. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Bilibili\n\n\nStrength\n\nCash in surplus of total debt.\n\n\nBalance sheet summary for BILI.\n\n\n\nWeakness\n\n No major weaknesses identified for BILI.\n\n\n\nOpportunity\n\nForecast to reduce losses next year.\n\n\nHas sufficient cash runway for more than 3 years based on current free cash flows.\n\n\nTrading below our estimate of fair value by more than 20%.\n\n\n\nThreat\n\nDebt is not well covered by operating cash flow.\n\n\nIs BILI well equipped to handle threats?\n\n\n\n Looking Ahead: \n Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to \"what assumptions need to be true for this stock to be under/overvalued?\" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For Bilibili, we've compiled three relevant items you should consider: \n\nFinancial Health: Does BILI have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.\nFuture Earnings: How does BILI's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.\n Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! \n\n PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. 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