China/Asia TMT

Shawn Yang

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

Thematic (Sector/Industry)

<ul>
<li>We recently conducted a round of interviews of several major Chinese online advertising agencies. We conclude that there has been slower-than-expected recovery in February.</li>
<li>Among major advertisers, travel, local service, medical service, and eCommerce have better performances. Gaming, automobile, and FMCG remain weak.</li>
<li>Tencent is still our top pick; maintain BUY to Baidu and Weibo; SELL to Kuaishou and BILI</li>
</ul>


We recently conducted a round of interviews of several major Chinese online advertising agencies. We conclude that there has been slower-than-expected recovery in February.
Among major advertisers, travel, local service, medical service, and eCommerce have better performances. Gaming, automobile, and FMCG remain weak.
Tencent is still our top pick; maintain BUY to Baidu and Weibo; SELL to Kuaishou and BILI


Tencent, Baidu, Weibo, Kuaishou and Bili: Online Ads Show Slow Recovery Trend

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.

Equity Bottom-Up

<ul><li>Baidu managed to deliver an all-around in the last quarter beat despite the fact that its financial performance was impacted by a challenging environment because of a rapid rise in COVID-19 cases as well as its impact on the broader economy.</li><li>Both feeds distributed through the Baidu app and mobile search queries continued experiencing double-digit growth in the quarter.</li><li>Baidu is expected to launch Ernie Bot, its new conversational AI bot, powered by its latest in-house large language models, to counter ChatGPT.</li></ul>

Baidu managed to deliver an all-around in the last quarter beat despite the fact that its financial performance was impacted by a challenging environment because of a rapid rise in COVID-19 cases as well as its impact on the broader economy.Both feeds distributed through the Baidu app and mobile search queries continued experiencing double-digit growth in the quarter.Baidu is expected to launch Ernie Bot, its new conversational AI bot, powered by its latest in-house large language models, to counter ChatGPT.

Baidu Inc.: Ernie Bot As An Aftermath Of The ChatGPT Effect? Check Out The Key Drivers

<ul>
<li>Baidu delivered 4Q22 results with top line beating cons. by 3.2% and non-GAAP net income beating cons. by 13.4%. </li>
<li>We expect both its ads and AI cloud businesses to recover with accelerated pace, which could partially offset the increase of R&amp;D investment in AI related technologies.</li>
<li>Reiterate BUY rating and slightly raise TP to US$ 172 to reflect the on-track recovery and AIGC synergy. Our TP implies 17.9x PE in 2023.</li>
</ul>


Baidu delivered 4Q22 results with top line beating cons. by 3.2% and non-GAAP net income beating cons. by 13.4%. 
We expect both its ads and AI cloud businesses to recover with accelerated pace, which could partially offset the increase of R&amp;D investment in AI related technologies.
Reiterate BUY rating and slightly raise TP to US$ 172 to reflect the on-track recovery and AIGC synergy. Our TP implies 17.9x PE in 2023.


[Baidu (BIDU US) Target Price Change]: Margin Improvement Offsets R&D Increase

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>Baidu announced (22 Feb) its 4Q22 and full year results: quarterly revenue was RMB33.</li><li>1bn, flat YoY, 4/3% higher than our forecast/Bloomberg consensus estimates; non-GAAP net income was RMB5.4bn, 7/13% higher than our forecast/Bloomberg consensus estimates, driven by stringent cost control.</li><li>Non ad revenue was up 10% YoY and accounted for 30% of Baidu Core revenue (4Q21: 26%). </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>

Baidu announced (22 Feb) its 4Q22 and full year results: quarterly revenue was RMB33.1bn, flat YoY, 4/3% higher than our forecast/Bloomberg consensus estimates; non-GAAP net income was RMB5.4bn, 7/13% higher than our forecast/Bloomberg consensus estimates, driven by stringent cost control.Non ad revenue was up 10% YoY and accounted for 30% of Baidu Core revenue (4Q21: 26%). 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) – Strong AI capability to empower business growth

<ul>
<li>Positive to PDD: Temu aired its commercial at the Super Bowl</li>
<li>Negative to FUTU: Bright Smart Securities downsizing the mainland account</li>
<li>Positive to BIDU: Updates on Baidu's ChatGPT-similar product "ERNIE Bot"</li>
</ul>


Positive to PDD: Temu aired its commercial at the Super Bowl
Negative to FUTU: Bright Smart Securities downsizing the mainland account
Positive to BIDU: Updates on Baidu's ChatGPT-similar product "ERNIE Bot"


China TMT Update(Feb.11-14): PDD, FUTU, BIDU

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)

Tencent, Baidu, Weibo, Kuaishou and Bili: Online Ads Show Slow Recovery Trend

We recently conducted a round of interviews of several major Chinese online advertising agencies. We conclude that there has been slower-than...

Blue Lotus Research Institute

Baidu Inc.: Ernie Bot As An Aftermath Of The ChatGPT Effect? Check Out The Key Drivers

Baidu managed to deliver an all-around in the last quarter beat despite the fact that its financial performance was impacted by a challenging...

Baptista Research

[Baidu (BIDU US) Target Price Change]: Margin Improvement Offsets R&D Increase

Reiterate Baidu BUY rating and slightly raise TP to US$ 172 to reflect the on-track recovery and AIGC synergy. Our TP implies 17.9x PE in 2023.

Blue Lotus Research Institute

Baidu (BIDU US) – Strong AI capability to empower business growth

Baidu announced (22 Feb) its 4Q22 and full year results: quarterly revenue was RMB33. 1bn, flat YoY, 4/3% higher than our forecast/Bloomberg...

CMB International

China TMT Update(Feb.11-14): PDD, FUTU, BIDU

PDD: Temu aired its commercial at the Super Bowl; FUTU: Bright Smart Securities downsizing the mainland account; BIDU: Updates on Baidu's ChatGPT...

Blue Lotus Research Institute

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