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.

Equity Bottom-Up

<ul><li>Baidu announced its 3Q23 results on 21 Nov: revenue was RMB34.4bn, up 6% YoY, 1% higher than Bloomberg consensus estimates.</li><li>Non-GAAP net income was RMB7.3bn, ahead of consensus estimates of RMB6.3bn, thanks to a beat in Baidu Core non-GAAP OP, aided by better-than-expected cost control in noncore business.</li><li>Management noted that generative AI related cloud revenue has contributed low single digit percentage of total cloud revenue in 3Q23, and expects generative AI empowered new initiatives to bring hundreds of millions of incremental ads revenue in 4Q23. </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 its 3Q23 results on 21 Nov: revenue was RMB34.4bn, up 6% YoY, 1% higher than Bloomberg consensus estimates.Non-GAAP net income was RMB7.3bn, ahead of consensus estimates of RMB6.3bn, thanks to a beat in Baidu Core non-GAAP OP, aided by better-than-expected cost control in noncore business.Management noted that generative AI related cloud revenue has contributed low single digit percentage of total cloud revenue in 3Q23, and expects generative AI empowered new initiatives to bring hundreds of millions of incremental ads revenue in 4Q23. 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) – Generative AI Related Revenue Generation Ramping Up

<ul><li>We attended 2023 Baidu World Conference on 17 Oct. Our key takeaways are: 1) Baidu unveiled the 4.0 version of Ernie large language model (LLM) and is integrating generative AI across all products to enhance user experience, which shall enhance Baidu’s monetization capability over the long-run, in our view; 2) Baidu Cloud has accumulated strong AI infrastructure, which enables more cost-efficient solutions to ease computing power cost pressure.</li><li>Although macro headwinds may weigh on short-term revenue growth of both ads and cloud businesses, and additional investment to support large-scale use of LLM may squeeze margins, we are more positive on the long-term development prospects of Baidu aided by the on-track development of LLM.</li><li>To account for short-term macro headwinds on its business, we fine-tune our SOTP-based TP to US$199.4 (was US$201.0). Maintain BUY.</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 attended 2023 Baidu World Conference on 17 Oct. Our key takeaways are: 1) Baidu unveiled the 4.0 version of Ernie large language model (LLM) and is integrating generative AI across all products to enhance user experience, which shall enhance Baidu’s monetization capability over the long-run, in our view; 2) Baidu Cloud has accumulated strong AI infrastructure, which enables more cost-efficient solutions to ease computing power cost pressure.Although macro headwinds may weigh on short-term revenue growth of both ads and cloud businesses, and additional investment to support large-scale use of LLM may squeeze margins, we are more positive on the long-term development prospects of Baidu aided by the on-track development of LLM.To account for short-term macro headwinds on its business, we fine-tune our SOTP-based TP to US$199.4 (was US$201.0). 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) – Takeaway from 2023 Baidu World Conference

<ul><li>Baidu announced (22 Aug) its 2Q23 results: revenue was RMB34.1bn, up 15% YoY, 1/2% higher than our forecast/Bloomberg consensus estimates.</li><li>NonGAAP net income was RMB8.0bn, ahead of our forecast/Bloomberg consensus estimates at RMB6.1/5.9bn, driven by stronger than expected revenue growth of high-margin Baidu Core ads business, and one-off foreign exchange gain.</li><li>We lift our SOTP based TP by 3% to US$201.0 to reflect better than expected recovery of core ads business. </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 2Q23 results: revenue was RMB34.1bn, up 15% YoY, 1/2% higher than our forecast/Bloomberg consensus estimates.NonGAAP net income was RMB8.0bn, ahead of our forecast/Bloomberg consensus estimates at RMB6.1/5.9bn, driven by stronger than expected revenue growth of high-margin Baidu Core ads business, and one-off foreign exchange gain.We lift our SOTP based TP by 3% to US$201.0 to reflect better than expected recovery of core ads business. 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) – Monetization of LLM the Next Key to Watch

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Cross Asset Strategy

<ul><li>When discussing the development of large language models (LLMs) Zhou Hongyi, CEO of Chinese cybersecurity firm 360 Security Technology Inc.</li><li>, dismissed claims that open-source LLMs are inferior to closed-source ones, calling such assertions “nonsense.</li><li>” Zhou’s comments, which were delivered during the 27th Harvard College China Forum in April, were widely seen as a response to Baidu Inc.</li></ul>

When discussing the development of large language models (LLMs) Zhou Hongyi, CEO of Chinese cybersecurity firm 360 Security Technology Inc., dismissed claims that open-source LLMs are inferior to closed-source ones, calling such assertions “nonsense.” Zhou’s comments, which were delivered during the 27th Harvard College China Forum in April, were widely seen as a response to Baidu Inc.

CX Daily: China Debates Pros and Cons of Open-Source AI Models 

<ul><li>Driven by recovery in offline activities and a low base, Baidu’s advertising business is on track to deliver steady recovery in 2Q23, in our view.</li><li>Cloud business revenue growth re-acceleration could take time, due to softness in demand and strategically focusing more on quality growth.</li><li>We lowered our SOTP based target price by 2% to US$195.0 mainly to account for slower than expected recovery for cloud revenue growth.</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.

Driven by recovery in offline activities and a low base, Baidu’s advertising business is on track to deliver steady recovery in 2Q23, in our view.Cloud business revenue growth re-acceleration could take time, due to softness in demand and strategically focusing more on quality growth.We lowered our SOTP based target price by 2% to US$195.0 mainly to account for slower than expected recovery for cloud revenue growth.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) – Recovery of Advertising Business on Track

China

East Money Information Co., Ltd. operates online financial information platform.  The Company's products include internet advertising and financial data.

Hithink RoyalFlush Information Network Co Ltd provides online financial data, data analysis software, and other financial software system.

Hithink RoyalFlush Information Network (300033 CH)

Wangsu Science & Technology Co., Ltd. provides online business solutions in China. The Company also provides Content Delivery Network (CDN), and Internet Data Centers (IDC).

Shanghai Wangsu Science & Technology Co (300017 CH)

People.cn Company Limited mainly engages in internet advertising, information services, mobile value-added and technical services. The Company's main products include original messages, government information services, public opinion research and consulting, mobile news, and ISP services.

Autohome Inc is an online destination for automobile consumers in China.  The Company delivers comprehensive, independent and interactive content to automobile buyers and owners.

JOYY Inc. operates a global social media platform. The Company offers platform which enables users to interact with each other in real time through online live media by creating, sharing, and enjoying a vast range of entertainment content and activities. JOYY serves customers in China.

Beijing TRS Information Technology Company Limited develops and markets software and technology services for unstructured data management. The Company provides software products that are enterprise search, content management and text mining.

Beijing Sinnet Technology Company Limited provides customers with broadband access services, IDC and its value-added services, and other internet integrated services. The Company's core business are broadband access services, IDC and its value-added services.

GDS Holdings Limited operates as a holding company. The Company, through its subsidiaries, develops and operates data centers. GDS Holdings offers risk and security management, information technology planing, remote monitoring, cloud hosting, virtualization, disaster recovery, and remote data protection services.

INESA Intelligent Tech Inc. operates in the IT industry. The Company designs and manages cloud servers and big data applications for businesses. INESA Intelligent also manufactures electronic components.

eBay Inc. operates an online trading community.  The Company's service is used by buyers and sellers for the exchange of products and services such as coins, collectibles, computers, memorabilia, stamps and toys, as well as concert and sporting tickets.  eBay also offers, through a subsidiary, secure online payment services.

Akamai Technologies, Inc. provides services for accelerating and improving the delivery of content and applications over the Internet; ranging from live and on-demand streaming video capabilities to conventional content on websites, to tools that help people transact business and reach out to new and existing customers.

AppFolio, Inc. provides cloud-based software solutions. The Company offers a cloud-based property management software that allows apartment and residential property managers to market, manage, and grow their business. AppFolio conducts business in the United States.

Zillow Group, Inc. provides e-commerce services. The Company provides information about homes, real estate listings, and mortgages through their website and mobile applications. Zillow serves homeowners, buyers, sellers, renters, and real estate professionals throughout the United States.

VeriSign Inc provides domain names and Internet security, enabling the world to connect online with reliability and confidence, anytime, anywhere. The Company ensures the security, stability and resiliency of key Internet infrastructure including the .com and .net top-level domains among others. VeriSign also offers intelligence-driven security services.

Info Edge (India) Limited operates an online job posting website. The website offers services for recruiters, job seekers, and employers. The Company also operates  an online matrimonial website for prospective brides, grooms, and relatives.

Kakao Corp. provides Internet portal services such as news, free e-mail, and leisure information.  The Company also offers cross-platform mobile messaging application that allows users to exchange messages.

GoDaddy, Inc. provides a cloud-based web platform for small businesses, web design professionals and individuals. The Company's platform provides applications that help them connect to their customers, manage their businesses and get found online.

Naver Corp. provides Internet site with web portal services, such as search engine, online game and content development.  The Company also offers marketing service through text and banner advertisement.

CoStar Group Inc. provides building-specific information to the United States commercial real estate industry and related industries. The Company's database details office and industrial space. The database provides digitized photographs and floor plan images on individual commercial buildings in the company's markets.

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) – Generative AI Related Revenue Generation Ramping Up

Baidu announced its 3Q23 results on 21 Nov: revenue was RMB34.4bn, up 6% YoY, 1% higher than Bloomberg consensus estimates.

CMB International

Baidu (BIDU US) – Takeaway from 2023 Baidu World Conference

To account for short-term macro headwinds on its business, we fine-tune our SOTP-based TP to US$199.4 (was US$201.0). Maintain BUY.

CMB International

Baidu (BIDU US) – Monetization of LLM the Next Key to Watch

aidu announced (22 Aug) its 2Q23 results: revenue was RMB34.1bn, up 15% YoY, 1/2% higher than our forecast/Bloomberg consensus estimates.

CMB International

CX Daily: China Debates Pros and Cons of Open-Source AI Models

When discussing the development of large language models (LLMs) Zhou Hongyi, CEO of Chinese cybersecurity firm 360 Security Technology Inc. ,...

Caixin Global

Baidu (BIDU US) – Recovery of Advertising Business on Track

Driven by recovery in offline activities and a low base, Baidu’s advertising business is on track to deliver steady recovery in 2Q23, in our view.

CMB International