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 to report C4Q23 revenue, GAAP op. profit and GAAP net income inline, (2.3%) and (4.5%) vs. consensus.</li>
<li>The slight bottom-line miss was mainly attribute to the increased marketing costs related to user acquisition. Baidu cloud revenue is robust due to AI product stimulating demand. </li>
<li>We cut our target price to US$146 for the spendings related to the construction of future e-commerce business but maintain BUY for its cheap valuation.</li>
</ul>


We expect Baidu to report C4Q23 revenue, GAAP op. profit and GAAP net income inline, (2.3%) and (4.5%) vs. consensus.
The slight bottom-line miss was mainly attribute to the increased marketing costs related to user acquisition. Baidu cloud revenue is robust due to AI product stimulating demand. 
We cut our target price to US$146 for the spendings related to the construction of future e-commerce business but maintain BUY for its cheap valuation.


[Baidu, Inc. (BIDU US, BUY, TP US$146)TP Change]: The Commercialization Path of AI Is Becoming Clear

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 to deliver inline 4Q23 revenue growth, with likely better-thanexpected operating profit growth aided by more disciplined-than-expected operating cost spent.</li><li>The ramp-up in revenue generation from generative AIrelated advertising and AI cloud was on track in 4Q23, in our view, and could drive further revenue growth in 2024.</li><li>We fine-tune our SOTP-based target price to USD195.7 (previous: USD195.6), which translates into 17.9x 2024E nonGAAP PE. Maintain BUY.</li></ul><p><em>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.</em></p>

We expect Baidu to deliver inline 4Q23 revenue growth, with likely better-thanexpected operating profit growth aided by more disciplined-than-expected operating cost spent.The ramp-up in revenue generation from generative AIrelated advertising and AI cloud was on track in 4Q23, in our view, and could drive further revenue growth in 2024.We fine-tune our SOTP-based target price to USD195.7 (previous: USD195.6), which translates into 17.9x 2024E nonGAAP PE. Maintain BUY.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) – Ramp-Up of Generative AI-Related Revenue on Track

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 managed to exceed analyst expectations in terms of revenue as well as earnings in the most recent quarter sustaining solid revenue, profit, and cash flow.</li><li>The strategic reinvention of the product portfolio with ERNIE and ERNIE bot played a pivotal role in achieving these results.</li><li>Baidu successfully launched EB4 ahead of expectations, attributing it to a unique end-to-end 4-layer AI infrastructure and valuable user feedback.</li></ul>

Baidu managed to exceed analyst expectations in terms of revenue as well as earnings in the most recent quarter sustaining solid revenue, profit, and cash flow.The strategic reinvention of the product portfolio with ERNIE and ERNIE bot played a pivotal role in achieving these results.Baidu successfully launched EB4 ahead of expectations, attributing it to a unique end-to-end 4-layer AI infrastructure and valuable user feedback.

Baidu Inc.: A Game-Changing Strategy That's Shaping AI's Future! - Major Drivers

<ul>
<li>Baidu reported revenue/non-GAAP operating profit/GAAP net income inline/7.72%/66.1% vs. our estimation.</li>
<li>We believe short term cyclical and medium term AIGC-led upswing in advertising can bridge Baidu’s long-term business, which we do see them difficult to monetize.</li>
<li>We maintain a BUY rating and adjusted TP to US$157, implying a 14.6x PE. It is currently trading at 11.4x PE in 2024.</li>
</ul>


Baidu reported revenue/non-GAAP operating profit/GAAP net income inline/7.72%/66.1% vs. our estimation.
We believe short term cyclical and medium term AIGC-led upswing in advertising can bridge Baidu’s long-term business, which we do see them difficult to monetize.
We maintain a BUY rating and adjusted TP to US$157, implying a 14.6x PE. It is currently trading at 11.4x PE in 2024.


[Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future

Thematic (Sector/Industry)

<ul>
<li>With consumption in the doldrums, one would expect none growing at double digits. This is actually not the case; </li>
<li>Further, how many Chinese Growth Equity names are accelerating in growth in the second half? Quite a lot;</li>
<li>We reiterate our view that Chinese Internet names are took-all winners with strong pricing power, which are showing when they need to. The weak market sentiment is self-fulfilling.</li>
</ul>


With consumption in the doldrums, one would expect none growing at double digits. This is actually not the case; 
Further, how many Chinese Growth Equity names are accelerating in growth in the second half? Quite a lot;
We reiterate our view that Chinese Internet names are took-all winners with strong pricing power, which are showing when they need to. The weak market sentiment is self-fulfilling.


How Many Chinese Growth Equity Names Are Growing at Double Digits?

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, BUY, TP US$146)TP Change]: The Commercialization Path of AI Is Becoming Clear

Baidu's Q4 earnings in line with expectations, slight miss due to marketing costs, cloud revenue strong from AI products, target price cut to $146...

Blue Lotus Research Institute

Baidu Inc.: A Game-Changing Strategy That's Shaping AI's Future! - Major Drivers

Baidu managed to exceed analyst expectations in terms of revenue as well as earnings in the most recent quarter sustaining solid revenue, profit,...

Baptista Research

[Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future

Baidu's financial results meet expectations, with potential for advertising growth to support long-term business. BUY rating maintained with...

Blue Lotus Research Institute

How Many Chinese Growth Equity Names Are Growing at Double Digits?

More Chinese growth equity names growing at double digit than single and more are accelerating in growth in C2H24. Pessimism can turn into self...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Baidu, Inc. (BIDU US, BUY, TP US$146)TP Change]: The Commercialization Path of AI Is Becoming Clear

​Baidu's Q4 earnings in line with expectations, slight miss due to marketing costs, cloud revenue strong from AI products, target price cut to $146...

Blue Lotus Research Institute

Baidu (BIDU US) – Ramp-Up of Generative AI-Related Revenue on Track

We expect Baidu to deliver inline 4Q23 revenue growth, with likely better-thanexpected operating profit growth aided by more disciplined-than...

CMB International

Baidu Inc.: A Game-Changing Strategy That's Shaping AI's Future! - Major Drivers

Baidu managed to exceed analyst expectations in terms of revenue as well as earnings in the most recent quarter sustaining solid revenue, profit,...

Baptista Research

[Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future

​Baidu's financial results meet expectations, with potential for advertising growth to support long-term business. BUY rating maintained with...

Blue Lotus Research Institute

How Many Chinese Growth Equity Names Are Growing at Double Digits?

More Chinese growth equity names growing at double digit than single and more are accelerating in growth in C2H24. Pessimism can turn into self...

Blue Lotus Research Institute

Baidu's Q4 earnings in line with expectations, slight miss due to marketing costs, cloud revenue strong from AI products, target price cut to $146...

Baidu's financial results meet expectations, with potential for advertising growth to support long-term business. BUY rating maintained with...