Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (09888 HK) [6] Core Views - Baidu's core advertising and iQIYI businesses are under short-term pressure, with 2024-2026 non-GAAP net profit forecasts revised downward to 26 1/27 2/29 8 billion yuan (previously 26 8/28 7/31 9 billion yuan), representing year-on-year growth rates of -9 3%/4 4%/9 4% [6] - The adjusted diluted EPS for 2024-2026 is projected at 9 0/9 3/10 0 yuan, with the current stock price of 76 65 HKD corresponding to 2024-2026 P/E ratios of 7 8/7 6/7 1 times [6] - Future growth is expected to be driven by macroeconomic recovery, AI product monetization, and the expansion of autonomous driving in key regions [6] Financial Performance - Baidu's 2024Q3 revenue declined by 3% year-on-year, in line with Bloomberg consensus expectations, while non-GAAP net profit fell 19% to 5 9 billion yuan, below the Bloomberg consensus of 6 2 billion yuan due to iQIYI's underperformance [7] - Baidu Core online marketing revenue decreased by 4% year-on-year in 2024Q3, underperforming the broader internet advertising market, which grew by 5 5% according to QuestMobile data [7] - AI and intelligent cloud revenue grew by 11% year-on-year in 2024Q3, with AI cloud accounting for approximately 11% of the total [7] - Autonomous driving platform Apollo Go saw a 20% year-on-year increase in ride volume in 2024Q3 [7] - iQIYI's revenue declined by 10% year-on-year in 2024Q3, with operating profit margin down by 6 percentage points [7] Business Outlook - Short-term advertising growth is pressured by weak SME client demand, increased competition, and the company's strategic shift towards AI-generated content [8] - AI is expected to enhance advertising monetization efficiency and drive cloud demand growth [8] - Autonomous driving business model validation is anticipated, with a focus on achieving breakeven in key regions [8] - AI cloud is projected to achieve higher steady-state profit margins compared to traditional businesses [8] Financial Projections - Revenue is forecasted to decline by 1 6% in 2024, followed by growth of 5 7% and 5 2% in 2025 and 2026, respectively [10] - Non-GAAP net profit is expected to decrease by 9 3% in 2024, then grow by 4 4% and 9 4% in 2025 and 2026, respectively [10] - Gross margin is projected to be 50 4% in 2024, improving to 51 2% in 2025 before declining to 42 7% in 2026 [10] - Net margin is expected to remain stable at around 19 7%-20 2% from 2024 to 2026 [10] - ROE is forecasted to decline from 10 7% in 2024 to 9 7% in 2026 [10]

Investment Rating - The report maintains an "Outperform" rating for Baidu Group-SW (09888 HK) [4] Core Views - Baidu's total revenue in Q3 2024 was RMB 33 5 billion, down 3% YoY, with adjusted net profit attributable to shareholders of RMB 5 9 billion, down 19% YoY [2] - Baidu Core revenue remained flat YoY at RMB 26 5 billion, while iQIYI revenue decreased by 10% YoY to RMB 7 2 billion [2] - Baidu Core's advertising revenue declined by 5% YoY, with 20% of search results generated by AI (up from 18% in August) and 70% of MAUs using generative search [2] - AI and large language models (LLMs) contributed incremental revenue to the advertising system, with approximately 20,000 advertisers generating daily ad spend [2] - Baidu's intelligent cloud revenue grew by 11% YoY to RMB 5 billion, with AI contributing 11% of total intelligent cloud revenue [5] - Apollo Go provided approximately 988,000 rides in Q3 2024, a 20% YoY increase, with cumulative rides exceeding 8 million in October [5] Financial Performance - Baidu Group's adjusted net profit margin remained stable at 18%, with Baidu Core's adjusted net profit margin at 21% [2] - Baidu Core's online marketing revenue was RMB 18 8 billion, down 5% YoY, while non-online marketing revenue increased by 12% YoY to RMB 7 7 billion [8] - Baidu Core's adjusted net profit attributable to shareholders was RMB 5 7 billion, down 18% YoY [8] - Baidu APP's MAUs reached 704 million in September 2024, a 6% YoY increase [16] AI and Cloud Business - AI model inference costs were optimized, with ERNIE processing 1 7 trillion tokens daily, up from 600 million in August [5] - The proportion of unmanned driving operations exceeded 70% nationwide in Q3 2024 and surpassed 80% in October, reaching 100% in Chongqing [5] - Baidu's intelligent cloud business maintained double-digit growth, with AI contributing 11% of total revenue [27] Financial Forecasts - Revenue is expected to grow from RMB 134 6 billion in 2023 to RMB 162 9 billion in 2026, with a CAGR of 7 1% [3] - Adjusted net profit attributable to shareholders is forecasted to be RMB 28 6 billion in 2024, RMB 31 billion in 2025, and RMB 33 2 billion in 2026 [30] - The adjusted EPS is projected to increase from RMB 10 19 in 2024 to RMB 11 82 in 2026 [3] Valuation - The report assigns a fair value range of HKD 100 00 to HKD 120 00 for Baidu Group-SW [4] - The current share price is HKD 76 65, with a total market capitalization of HKD 215 02 billion [4]

Investment Rating - The report indicates a positive investment outlook for Baidu, highlighting strong quarterly performance and growth in AI applications. Core Insights - Baidu's Q3 2024 revenue reached 33.6 billion yuan, with core revenue at 26.5 billion yuan and a core net profit of 7.54 billion yuan, reflecting a year-on-year growth of 17%, surpassing market expectations [1] - The daily call volume of Baidu's Wenxin large model has surged to 1.5 billion, a nearly 30-fold increase from 50 million calls reported in Q4 of the previous year [2][7] - Baidu plans to launch a new version of the Wenxin large model in early 2025 [3][4] Summary by Sections Financial Performance - In Q3 2024, Baidu's intelligent cloud revenue reached 4.9 billion yuan, marking an 11% year-on-year increase, with AI-related revenue exceeding 11% of total revenue [11] - The user base for Wenxin Yiyan has grown to 430 million, a more than 500% increase within a year [9] AI Strategy and Applications - Baidu has established a long-term strategy driven by AI, focusing on application-driven development to enhance usability and effectiveness of AI models [8] - The introduction of the no-code development tool "Miao Da" allows users to build systems through natural language interaction, attracting over 5,000 enterprises for testing [12][13] Market Position and Ecosystem - Baidu's intelligent cloud holds a 26.4% market share in China's AI public cloud service market, maintaining the top position for five consecutive years [11] - The integration of AI capabilities into Baidu's products, such as Baidu Wenku, has led to a 300% year-on-year increase in monthly active users for AI features [16]

Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (09888.HK) [3] Core Insights - The company is undergoing an AI-driven transformation, but its advertising business still requires improvement. The intelligent cloud segment shows steady growth, and the core profits of Baidu remain on an upward trend [4] Financial Performance Summary - In Q3 2024, Baidu reported revenues of 33.6 billion yuan, a year-on-year decrease of 3%. The Non-GAAP net profit for the same period was 5.9 billion yuan, down 19% year-on-year [4] - Baidu's core revenue reached 26.5 billion yuan in Q3 2024, a slight decline of 0.29% year-on-year, while the Non-GAAP net profit attributed to the core business was 7.54 billion yuan, an increase of 17% year-on-year [4] - Online marketing revenue was 18.8 billion yuan, down 4% year-on-year, impacted by a weak macro environment. Non-online marketing revenue was 7.7 billion yuan, up 12% year-on-year, primarily driven by the intelligent cloud business [4] AI and Intelligent Driving Developments - The daily API call volume for the Wenxin large model reached 1.5 billion, with the user base for Wenxin Yiyan reaching 430 million. The intelligent cloud platform has assisted clients in fine-tuning models for 33,000 instances and developing 770,000 enterprise applications [4] - The autonomous driving service "Luo Bo Kuaipao" saw a 20% year-on-year increase in order volume, reaching 988,000 orders in Q3 2024, with a market share exceeding 70% for fully autonomous driving orders [4] iQIYI Performance - iQIYI's revenue in Q3 2024 was 7.2 billion yuan, down 10% year-on-year, with a Non-GAAP net profit of 480 million yuan, a decrease of 23% year-on-year. Membership revenue fell by 9% to 4.4 billion yuan, while advertising revenue dropped by 20% to 1.3 billion yuan [4] Profit Forecast and Valuation - The report forecasts Non-GAAP net profits for Baidu of 26.6 billion yuan, 28.2 billion yuan, and 30.9 billion yuan for 2024, 2025, and 2026 respectively. The current stock price corresponds to a Non-GAAP PE of 8.17, 7.71, and 7.04 for the respective years [4]

Financial Performance - Total revenue for Q3 2024 was RMB 33.6 billion (USD 4.78 billion), a decrease of 3% year-over-year[18] - Baidu Core revenue was RMB 26.5 billion (USD 3.78 billion), remaining flat compared to the previous year; online marketing revenue was RMB 18.8 billion (USD 2.68 billion), down 4% year-over-year[18] - iQIYI's revenue was RMB 7.2 billion ($1.03 billion), a year-over-year decrease of 10%[19] - Total revenue for Baidu was RMB 34,447 million for the quarter ending September 30, 2023, a decrease of 1.5% compared to the previous quarter[34] - Total revenue for Baidu Group in Q3 2023 was RMB 26,572 million, a decrease of 0% year-over-year and a decrease of 1% quarter-over-quarter[42] Profitability - Operating profit was RMB 5.9 billion ($844 million), with a core operating profit of RMB 5.7 billion ($811 million) and a core operating profit margin of 21%[19] - Net profit attributable to Baidu was RMB 7.6 billion ($1.09 billion), with a diluted earnings per American Depositary Share of RMB 21.60 ($3.08)[20] - Adjusted EBITDA was RMB 8.7 billion ($1.24 billion) with an adjusted EBITDA margin of 26%[20] - Operating profit for the same quarter was RMB 6,274 million, representing a margin of approximately 18.2%[34] - The net profit attributable to Baidu for the same period was RMB 6,956 million, reflecting an 18% decline year-over-year and a 22% increase quarter-over-quarter[44] Cash Flow and Assets - As of September 30, 2024, cash, cash equivalents, restricted cash, and short-term investments totaled RMB 144.5 billion ($20.59 billion)[22] - Free cash flow was RMB 2.6 billion ($376 million), excluding iQIYI, free cash flow was RMB 2.4 billion ($342 million)[22] - Cash and cash equivalents increased to RMB 28,682 million as of September 30, 2024, up from RMB 25,231 million at the end of 2023[38] - Total assets reached RMB 417,316 million as of September 30, 2024, an increase from RMB 406,759 million at the end of 2023[38] Research and Development - Research and development expenses amounted to RMB 6,101 million, which is a 3.6% increase from RMB 5,889 million in the previous quarter[34] - Baidu's research and development expenses for the same period were RMB 732 million, a decrease of 22% year-over-year[44] - Baidu's research and development expenses increased to RMB 1,841 million for the three months ended September 30, 2023, reflecting a commitment to innovation and technology advancement[48] User Engagement and Market Presence - Monthly active users of Baidu APP reached 704 million in September 2024, a 6% increase year-over-year[15] - The number of autonomous driving orders from the service "Luobo Kuaipao" reached 988,000 in Q3 2024, a 20% year-over-year increase[13] - The proportion of fully autonomous driving orders from "Luobo Kuaipao" exceeded 70% of total orders in Q3 2024, increasing to 80% by October 2024[13] - The company experienced a significant increase in sales and management expenses, which reached RMB 290 million for the three months ended September 30, 2023, up 4% year-over-year[44] - The company is focusing on expanding its market presence and investing in new technologies to drive future growth[42] Strategic Initiatives - Baidu repurchased shares worth USD 161 million since the beginning of Q4 2024, with a cumulative repurchase amount of approximately USD 1.4 billion under the 2023 repurchase plan[11] - The company plans to expand its market presence by launching new AI-driven products in the upcoming quarters, aiming for a 20% increase in revenue from these initiatives[48] - The company is also focusing on strategic acquisitions to enhance its technology capabilities, with a budget allocation of RMB 2 billion for potential mergers and acquisitions in the next fiscal year[48] - The company expects to achieve a revenue growth rate of 10-15% for the next quarter, driven by new product launches and market expansion strategies[48] Financial Metrics and Guidance - The company emphasized the importance of non-GAAP financial metrics for assessing performance and liquidity, which exclude certain non-cash and non-operating items[32] - Non-GAAP net profit attributable to Baidu was RMB 5.9 billion ($839 million) with a non-GAAP net profit margin of 21%[20] - Basic earnings per American Depositary Share (ADS) for the quarter was RMB 18.45, compared to RMB 15.11 in the previous quarter, reflecting a growth of 22.5%[36]

Investment Rating - The report maintains a "Buy" rating for Baidu Group with a target price of 137 HKD, indicating an expected upside of over 20% within the next six months [1]. Core Insights - Baidu's total revenue for Q3 2024 is projected to be 33.6 billion CNY, a year-on-year decrease of 2.5%. The Non-GAAP net profit is expected to be 6.2 billion CNY, down 14% year-on-year [1]. - The report anticipates that Baidu Core revenue will be 26.3 billion CNY, a decline of 1.2% year-on-year, with online marketing revenue at 18.7 billion CNY, down 5% [1]. - The AI cloud business is expected to grow, with revenue projected at 5 billion CNY, reflecting a 14% year-on-year increase. The user base for Wenxin Yiyan is expected to reach 430 million, with daily usage hitting 1.5 billion [1]. Summary by Sections Financial Performance - Total revenue for Q3 2024 is expected to be 33.6 billion CNY, down 2.5% year-on-year. Non-GAAP net profit is projected at 6.2 billion CNY, a decrease of 14% [1]. - Baidu Core revenue is anticipated to be 26.3 billion CNY, with online marketing revenue at 18.7 billion CNY, down 5% year-on-year [1]. Business Segments - Non-online marketing revenue is expected to grow by 10% year-on-year, reaching 7.5 billion CNY. iQIYI's revenue is projected to be 7.6 billion CNY, down 5% [1]. - The AI cloud business is projected to achieve 5 billion CNY in revenue, marking a 14% increase year-on-year [1]. Future Outlook - The report suggests that while advertising recovery may be slower than expected, there could be a turning point next year. The application of large language models is expected to drive growth in Baidu's cloud business [1]. - The report emphasizes the ongoing development of AI applications and the establishment of an intelligent agent platform, which has attracted 150,000 enterprises and 800,000 developers [1].

2024 年 11 月 11 日 公司研究 广告需求尚待改善，关注百度文库等 AI 业务新进展 ——百度集团-SW（9888.HK）24Q3 业绩前瞻 要点 业绩前瞻：我们预计百度集团 24Q3 总收入同比下降 3.9%至 331.2 亿元，百 度核心总收入同比下降 2.0%至 260.4 亿元。我们预计百度集团 24Q3 核心非 GAAP 下经营利润 63.9 亿元，同比下降 4.2%，对应经营利润率 24.5%；百度 集团 24Q3 非 GAAP 下净利润 58.3 亿元，对应净利率 17.6%。 1、在线营销业务：Q3 广告业务弱势尚未好转，静待宏观环境改善和 AI 商业 化带来新增长。我们预计 24Q3 百度核心收入 260.4 亿元，同比下降 2.0%。 其中在线营销服务同比下降 5.0%至 187.2 亿元，广告下滑主要系：1）宏观 环境延续较弱趋势，房地产、招商加盟、交通、医疗等百度主要广告主仍缺乏 营销投入动力。根据 CTR 媒介智讯，24M1-M8 广告市场整体花费同比上涨 3.1%，行业回暖幅度较为有限。2）生成式 AI 对用户搜索的改造仍在进展中， AIGC 内容占百度搜索结果页面比例有 ...

Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (09888 HK) [1] Core Views - Baidu's Q3 2024 revenue is expected to be 33 4 billion yuan, a year-on-year decline of 3%, with Baidu Core revenue at 26 3 billion yuan, down 1% year-on-year [2] - Adjusted operating profit is forecasted at 6 6 billion yuan, with Baidu Core's adjusted operating profit margin at 24% [2] - Advertising revenue is expected to decline by nearly 5% year-on-year due to macroeconomic impacts, while cloud computing revenue is projected to grow by nearly 14% year-on-year [3] - Baidu's AI business continues to gain traction, with its generative AI and cloud computing leading in the Chinese market [3] - The company's AI-driven search transformation is expected to further enhance its core business capabilities [4] Financial Performance Summary Revenue and Profit - Total revenue for 2024E is projected at 133 582 million yuan, a slight decline of 0 76% year-on-year [1] - Non-GAAP net profit attributable to shareholders is expected to be 27 153 million yuan in 2024E, down 5 55% year-on-year [1] - EPS (Non-GAAP) for 2024E is forecasted at 9 68 yuan per share [1] Segment Performance - Advertising revenue remains under pressure, with a projected 5% decline in Q3 2024 [3] - Cloud computing revenue is expected to grow by 14% year-on-year in Q3 2024, driven by AI contributions [3] - Non-cloud and non-advertising businesses are expected to remain stable [3] AI and Cloud Computing - Baidu's AI business has established a leading position in China's generative AI and cloud computing markets, with a 32 4% share in the "Model as a Service (MaaS)" market and a 17% share in the "AI Large Model Solutions" market [3] - The company's AI-driven search transformation is expected to further enhance its core business capabilities [4] Valuation and Shareholder Returns - The 2024E Non-GAAP P/E ratio is projected at 8 45x [1] - The company's ongoing share buybacks reflect its commitment to shareholder returns [4] Financial Projections Income Statement - Total revenue for 2024E is projected at 133 582 million yuan, with a slight decline of 0 76% year-on-year [1] - Non-GAAP net profit attributable to shareholders is expected to be 27 153 million yuan in 2024E, down 5 55% year-on-year [1] Balance Sheet - Total assets are projected to grow from 406 759 million yuan in 2023A to 477 993 93 million yuan in 2026E [12] - The debt-to-equity ratio is expected to decrease from 35 44% in 2023A to 29 15% in 2026E [14] Cash Flow - Operating cash flow is expected to increase from 36 615 million yuan in 2023A to 45 902 06 million yuan in 2026E [13] - Capital expenditures are projected to decrease from 4 335 million yuan in 2023A to 3 400 million yuan in 2026E [13] Key Financial Ratios - ROE is expected to increase from 8 34% in 2023A to 8 48% in 2026E [14] - The gross margin is projected to remain stable, ranging from 50 82% to 52 15% from 2024E to 2026E [14] - The net profit margin is expected to improve from 15 09% in 2023A to 18 49% in 2026E [14]

港股公司报告 | 公司点评 | --- | --- | --- | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 132.37 HKD, based on a projected adjusted PE of 12x for 2024, corresponding to a market capitalization of 338.7 billion CNY [2][8]. Core Insights - The company reported Q2 2024 revenue of 33.93 billion CNY, slightly below Bloomberg consensus of 34.11 billion CNY, with an adjusted net profit of 7.40 billion CNY, exceeding the consensus estimate of 6.68 billion CNY [1]. - Core advertising remains under pressure, while cloud business shows strong growth. The core revenue was 26.69 billion CNY, up 1.1% year-over-year, with advertising revenue at 19.2 billion CNY, down 2.0% year-over-year, which was better than the expected decline of 2.9% [1]. - Cost control is excellent, with a core gross margin of 59.2% and an operating profit margin (OPM) of 21.0%, which is above market expectations [1]. - AI large models are restructuring the company's business, with significant increases in user engagement and application. The daily invocation of the Wenxin large model has exceeded 600 million times, and nearly 18% of search results are generated by AI [1]. - The autonomous driving service "Luobo Kuaipao" saw a 26% year-over-year increase in order volume, reaching approximately 899,000 orders in Q2 2024 [1]. Financial Summary - The company expects adjusted net profits of 27.4 billion CNY, 29.2 billion CNY, and 30.3 billion CNY for 2024, 2025, and 2026 respectively, with revenue projections of 135 billion CNY, 142.9 billion CNY, and 151.6 billion CNY for the same years [2][8]. - The report outlines a forecast for core revenue growth, with online marketing expected to decline slightly in the near term, while cloud services are projected to grow significantly [7].