Analyst - Media&Entertainment Sector, Blue Lotus Research Institute

Stan Zhao

Analyst - Media&Entertainment Sector

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>Tesla's Cybercab is expected to be under $30,000 in price, with production costs of  ~$25,000 and operating costs of 30-40 cents per mile.</li>
<li>We found Baidu's robotaxi to be faces 50% higher daily total costs and runs a fleet of 600 autonomous vehicles.</li>
<li>To compete with Tesla’s Cybercab by 2026, Baidu must significantly reduce its operating costs. Tesla's lower price and efficiency could capture a larger market share.</li>
</ul>


Tesla's Cybercab is expected to be under $30,000 in price, with production costs of  ~$25,000 and operating costs of 30-40 cents per mile.
We found Baidu's robotaxi to be faces 50% higher daily total costs and runs a fleet of 600 autonomous vehicles.
To compete with Tesla’s Cybercab by 2026, Baidu must significantly reduce its operating costs. Tesla's lower price and efficiency could capture a larger market share.


A Comparison of Tesla’s Cybercab and Baidu’s Apollo Shows the Latter Must Improve

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

<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

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's revenue growth for the first quarter exceeded expectations, with a year-over-year increase of 4%, reaching RMB 23.8 billion.</li><li>Additionally, Baidu's continued efforts in Gen AI path have resulted in a 12% year-over-year acceleration in the revenue growth from Baidu AI Cloud, which also delivered an operating profit on a non-GAAP basis.</li><li>These positive results signify the company's successful transition from an internet-centric business to an AI-first business.</li></ul>

Baidu's revenue growth for the first quarter exceeded expectations, with a year-over-year increase of 4%, reaching RMB 23.8 billion.Additionally, Baidu's continued efforts in Gen AI path have resulted in a 12% year-over-year acceleration in the revenue growth from Baidu AI Cloud, which also delivered an operating profit on a non-GAAP basis.These positive results signify the company's successful transition from an internet-centric business to an AI-first business.

Baidu Inc.: What Are Their Expansion Plans Of AI Offerings Beyond Ernie? - Major Drivers

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)

A Comparison of Tesla’s Cybercab and Baidu’s Apollo Shows the Latter Must Improve

Baidu's robotaxi Apollo faces higher costs to build and operate than Tesla's Cybercab and Baidu must reduce operating costs to compete effectively...

Blue Lotus Research Institute

[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'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 Inc.: What Are Their Expansion Plans Of AI Offerings Beyond Ernie? - Major Drivers

Baidu's revenue growth for the first quarter exceeded expectations, with a year-over-year increase of 4%, reaching RMB 23.8 billion. Additionally,...

Baptista Research

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A Comparison of Tesla’s Cybercab and Baidu’s Apollo Shows the Latter Must Improve

​Baidu's robotaxi Apollo faces higher costs to build and operate than Tesla's Cybercab and Baidu must reduce operating costs to compete effectively...

Blue Lotus Research Institute

[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'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 Inc.: What Are Their Expansion Plans Of AI Offerings Beyond Ernie? - Major Drivers

Baidu's revenue growth for the first quarter exceeded expectations, with a year-over-year increase of 4%, reaching RMB 23.8 billion. Additionally,...

Baptista Research

Baidu's robotaxi Apollo faces higher costs to build and operate than Tesla's Cybercab and Baidu must reduce operating costs to compete effectively...

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.