BOC International Reaffirms Bilibili 'Buy' Rating on Deal to Absorb Tencent Stake Sale

BOC International has maintained its "Buy" rating on Bilibili Inc. (09626.HK), calling a newly announced set of transactions a "highly constructive" solution that resolves the selling pressure from major shareholder Tencent Holdings (00700.HK). The bank reaffirmed its price target of HK$224 per share for Bilibili's Hong Kong-listed stock.

In a research note, the bank analyzed a series of transactions Bilibili announced after the market closed last Friday. The deal is structured to manage Tencent's stake reduction while simultaneously raising capital for Bilibili.

Details of the Transaction

The complex maneuver involves a convertible bond issuance paired with a share repurchase program. According to BOC International's report, the key components include:

• A proposed issuance of $700 million in zero-coupon convertible bonds, due in 2031.
• A conversion price set at an approximate 35% premium over the recent share price, with an optional redemption for investors in 2029.
• A concurrent share buyback and cancellation program totaling $300 million.
• The net result is an infusion of approximately $400 million in fresh capital for Bilibili.

Analyst Commentary

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BOC International described the plan as a "tailor-made" package that effectively mitigates the potential negative impact on Bilibili's share price that could arise from a large bond offering and a simultaneous block sale by a major investor. The bank believes this move removes the uncertainty of Tencent's stake reduction "once and for all."

Furthermore, the report highlighted that Tencent itself will subscribe to $200 million of the new convertible bonds. BOC International views this participation as a strong signal of Tencent's confidence in Bilibili's long-term upside potential, even as it reduces its overall equity holding.

Strategic Outlook

The bank stated it remains optimistic about Bilibili's prospects for achieving strong and sustainable profit growth. It cited the company's healthy "3C" flywheel—referring to its Content, Community, and Commerce ecosystem—as a core driver, which it believes is being further amplified by a focused and disciplined execution of its AI strategy.