Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>We expect Baidu (BIDU) to report C3Q24 revenue, GAAP operating profit and GAAP net income (3.6%), (4.1%) and (2.3%) vs. consensus. </li>
<li>Weak macro and restructuring of AI advertising continued to affect BIDU negatively;</li>
<li>However, stimulus policy in C3Q24 shall lead to rebound in GDP and thus advertising. We raised 2024-25 estimates and raised TP by 5%.</li>
</ul>


We expect Baidu (BIDU) to report C3Q24 revenue, GAAP operating profit and GAAP net income (3.6%), (4.1%) and (2.3%) vs. consensus. 
Weak macro and restructuring of AI advertising continued to affect BIDU negatively;
However, stimulus policy in C3Q24 shall lead to rebound in GDP and thus advertising. We raised 2024-25 estimates and raised TP by 5%.


[Baidu, Inc. (BIDU US, SELL, TP US$84) Preview]: C3Q24 Preview: Slump in Economy Exacts Its Toll

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We expect Baidu Core business to deliver broadly inline-with-consensus revenue, and slightly better-than-consensus non-GAAP operating profit for 3Q24E.</li><li>Although proactive business adjustments to embed more GenAI-related results in search results weigh on short-term monetization, we view the adjustments as vital for Baidu’s long-term business development and monetization improvement, and expect better visibility on ads revenue growth to be one of the key catalysts for stock price.</li><li>We see additional catalysts to come from: 1) more rapid-than-expected expansion of Robotaxi business; 2) more rapid-than-expected commercialization from GenAI-related initiatives; and 3) enhancement of shareholder return. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We expect Baidu Core business to deliver broadly inline-with-consensus revenue, and slightly better-than-consensus non-GAAP operating profit for 3Q24E.Although proactive business adjustments to embed more GenAI-related results in search results weigh on short-term monetization, we view the adjustments as vital for Baidu’s long-term business development and monetization improvement, and expect better visibility on ads revenue growth to be one of the key catalysts for stock price.We see additional catalysts to come from: 1) more rapid-than-expected expansion of Robotaxi business; 2) more rapid-than-expected commercialization from GenAI-related initiatives; and 3) enhancement of shareholder return. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Baidu (BIDU US) - Awaiting Recovery of Ads Revenue Growth

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>Baidu has reported its financial results for the second quarter of fiscal year 2024, showcasing resilience with its Baidu Core which posted a modest revenue growth to RMB 26.7 billion.</li><li>This growth was driven by the accelerating performance in the AI Cloud sector, which somewhat counterbalanced the drag provided by the online marketing segment.</li><li>Notably, there was an 8% year-over-year increase in non-GAAP operating profit for Baidu Core, reflecting continued operational efficiencies.</li></ul>

Baidu has reported its financial results for the second quarter of fiscal year 2024, showcasing resilience with its Baidu Core which posted a modest revenue growth to RMB 26.7 billion.This growth was driven by the accelerating performance in the AI Cloud sector, which somewhat counterbalanced the drag provided by the online marketing segment.Notably, there was an 8% year-over-year increase in non-GAAP operating profit for Baidu Core, reflecting continued operational efficiencies.

Baidu's Launch of Advanced AI Model Ernie 4.0 Turbo

<ul>
<li>BIDU reported C2Q24 top line, non-GAAP operating profit and GAAP net income inline, 5.6% and 7.6% vs. our estimate and inline, 10% and 8.4% vs. consensus. </li>
<li>Weak economy is only part of the problem. Weak monetization exists across the entire product line. </li>
<li>We cut the TP to US$80 and reiterate SELL rating.</li>
</ul>


BIDU reported C2Q24 top line, non-GAAP operating profit and GAAP net income inline, 5.6% and 7.6% vs. our estimate and inline, 10% and 8.4% vs. consensus. 
Weak economy is only part of the problem. Weak monetization exists across the entire product line. 
We cut the TP to US$80 and reiterate SELL rating.


[Baidu, Inc. (BIDU US, SELL, TP US$80) TP Change]: Baidu’s Problem Is Not All Cyclical…Maintain SELL

<ul><li>Baidu announced (22 Aug) its 2Q24 results: revenue was RMB33.9bn, down 0.4% YoY and largely in line with Bloomberg consensus; non-GAAP net income was RMB7.4bn, 9% better than consensus, thanks to better-than-expected sales and marketing expense control.</li><li>Baidu is becoming more determined in driving user experience improvement, guiding to aim for a further increase in the contribution of Gen-AI generated results in search results page, and prioritize user experience improvement over monetization in the short term.</li><li>Although the transformation will likely bring incremental headwinds to ads revenue growth in the near term, Baidu’s long-term monetization prospects should be enhanced, in our view, with enhanced user stickiness, and potential innovative cost per sale (CPS) ads formats. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Baidu announced (22 Aug) its 2Q24 results: revenue was RMB33.9bn, down 0.4% YoY and largely in line with Bloomberg consensus; non-GAAP net income was RMB7.4bn, 9% better than consensus, thanks to better-than-expected sales and marketing expense control.Baidu is becoming more determined in driving user experience improvement, guiding to aim for a further increase in the contribution of Gen-AI generated results in search results page, and prioritize user experience improvement over monetization in the short term.Although the transformation will likely bring incremental headwinds to ads revenue growth in the near term, Baidu’s long-term monetization prospects should be enhanced, in our view, with enhanced user stickiness, and potential innovative cost per sale (CPS) ads formats. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Baidu (BIDU US) - More aggressive in Gen-AI empowered ads business transformation

China

Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, news, MP3, and image searches, voice assistance, online storage, and navigation services. Baidu serves clients globally.

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Baidu (BIDU US)

[Baidu, Inc. (BIDU US, SELL, TP US$84) Preview]: C3Q24 Preview: Slump in Economy Exacts Its Toll

Baidu's Q3 earnings expected to be lower than consensus due to weak macro environment and AI advertising restructuring.

Blue Lotus Research Institute

Baidu (BIDU US) - Awaiting Recovery of Ads Revenue Growth

We expect Baidu Core business to deliver broadly inline-with-consensus revenue, and slightly better-than-consensus non-GAAP operating profit for...

CMB International

Baidu's Launch of Advanced AI Model Ernie 4.0 Turbo

Baidu has reported its financial results for the second quarter of fiscal year 2024, showcasing resilience with its Baidu Core which posted a...

Baptista Research

[Baidu, Inc. (BIDU US, SELL, TP US$80) TP Change]: Baidu’s Problem Is Not All Cyclical…Maintain SELL

BIDU's Q2 results meet expectations, but weak monetization across products leads to a lowered price target and a SELL rating.

Blue Lotus Research Institute

Baidu (BIDU US) - More aggressive in Gen-AI empowered ads business transformation

Baidu announced (22 Aug) its 2Q24 results: revenue was RMB33.9bn, down 0.4% YoY and largely in line with Bloomberg consensus

CMB International

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Baidu, Inc. (BIDU US, SELL, TP US$84) Preview]: C3Q24 Preview: Slump in Economy Exacts Its Toll

​Baidu's Q3 earnings expected to be lower than consensus due to weak macro environment and AI advertising restructuring.

Blue Lotus Research Institute

Baidu (BIDU US) - Awaiting Recovery of Ads Revenue Growth

We expect Baidu Core business to deliver broadly inline-with-consensus revenue, and slightly better-than-consensus non-GAAP operating profit for...

CMB International

Baidu's Launch of Advanced AI Model Ernie 4.0 Turbo

Baidu has reported its financial results for the second quarter of fiscal year 2024, showcasing resilience with its Baidu Core which posted a...

Baptista Research

[Baidu, Inc. (BIDU US, SELL, TP US$80) TP Change]: Baidu’s Problem Is Not All Cyclical…Maintain SELL

​BIDU's Q2 results meet expectations, but weak monetization across products leads to a lowered price target and a SELL rating.

Blue Lotus Research Institute

Baidu (BIDU US) - More aggressive in Gen-AI empowered ads business transformation

Baidu announced (22 Aug) its 2Q24 results: revenue was RMB33.9bn, down 0.4% YoY and largely in line with Bloomberg consensus

CMB International

Baidu's Q3 earnings expected to be lower than consensus due to weak macro environment and AI advertising restructuring.

BIDU's Q2 results meet expectations, but weak monetization across products leads to a lowered price target and a SELL rating.