Investment Rating - The report indicates that the company is aiming for an IPO with a target valuation of approximately 50.2 billion USD (360 billion RMB) and plans to raise 119.4 million USD [5][8]. Core Insights - The company, WeRide, is recognized as a pioneer in the autonomous driving sector, being the first to launch a Level 4 autonomous taxi service globally [4][10]. - Despite significant investments and a strong operational presence in multiple countries, the company has yet to achieve profitability, with substantial ongoing research and development costs [17][19]. - The company is shifting its business model towards a consumer-oriented ride-hailing service, aiming to compete directly with other players in the market [26]. Summary by Sections Company Overview - WeRide, founded by former Baidu executive Han Xu, has developed an autonomous driving app called "WeRide Go" and operates in cities like Guangzhou and Beijing [3][4]. - The company has received significant backing from various investors, including the Renault-Nissan-Mitsubishi Alliance, which is set to invest 97 million USD post-IPO [6][9]. Financial Performance - The company reported revenues of 4 billion RMB in 2023, a decrease of 24% year-on-year, with a significant drop in product revenue [13][16]. - The revenue structure has shifted from product sales to technology services, with service revenue growing significantly due to contracts with major suppliers like Bosch [12][16]. Business Model - WeRide's revenue generation is based on two main models: selling vehicles and providing technology services [10][11]. - The company employs a "light asset" model, sourcing vehicles from OEMs rather than manufacturing them in-house [11][12]. Market Position and Strategy - The company is positioned as a leader in the autonomous driving space, holding licenses in multiple countries and operating in 30 cities globally [4][10]. - Future plans include a focus on expanding the ride-hailing service, leveraging IPO funds for technology development and fleet commercialization [24][26].

Investment Rating - The investment rating for Baidu Group-SW is "Buy" (maintained) [1] Core Insights - The company's revenue for Q2 2024 was slightly below market expectations, while the adjusted net profit exceeded market expectations. The revenue was 33.9 billion yuan, a year-on-year decrease of 0.36%, and the Non-GAAP net profit was 7.4 billion yuan, down 8% year-on-year but better than Bloomberg consensus [3][4] - The advertising business continues to face external pressures, with internal generative AI transformations impacting short-term monetization efficiency. Core revenue for Q2 was 26.7 billion yuan, a year-on-year increase of 1%, with online marketing revenue at 19.2 billion yuan, down 2% year-on-year [3][4] - Non-advertising business is driven by generative AI, particularly in cloud computing, which saw a 14% year-on-year growth in revenue for Q2. The generative AI and foundational model revenue continued to grow significantly, accounting for 9% of cloud revenue in Q2 [4] - Despite increased investments in generative AI, strict cost control has improved profitability, with Non-GAAP gross margin and operating margin at 59.6% and 26.2%, respectively, both better than Bloomberg consensus [4] Financial Forecasts - The revenue forecast for Baidu Group for 2024 is 134.03 billion yuan, with a slight decrease of 0.42% compared to 2023. The Non-GAAP net profit is projected to be 29.03 billion yuan, with a growth rate of 0.97% [2][8] - The company has adjusted its Non-GAAP net profit forecasts for 2024-2026 from 29.8 billion, 31.8 billion, and 34.1 billion yuan to 29.0 billion, 30.4 billion, and 32.6 billion yuan, respectively [8]

Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to HKD 107, representing a potential upside of 28% from the current price of HKD 83.5 [3][11]. Core Insights - The company's Q2 2024 performance exceeded market expectations primarily due to lower market forecasts and effective cost optimization, although it faces significant pressures in the second half of the year due to economic uncertainties and challenges in monetizing AI search capabilities [3][11]. - The advertising business is under pressure, with core online marketing revenue declining by 2% year-on-year to RMB 192 billion, influenced by a weak macroeconomic environment and increased competition [3][6]. - The AI cloud business showed strong growth, with revenue increasing by 14% year-on-year to RMB 51 billion, driven by incremental income from generative AI and foundational models [3][7]. Summary by Sections Financial Performance - For Q2 2024, total revenue was RMB 339 billion, slightly below market expectations, with a year-on-year decline of 0.4% and a quarter-on-quarter decline of 8% [5]. - Non-GAAP operating profit reached RMB 75 billion, reflecting a year-on-year increase of 2%, while non-GAAP net profit was RMB 74 billion, down 8% year-on-year but better than market expectations [5][8]. - The company reported a cash position of RMB 162 billion, with free cash flow of RMB 63 billion, indicating a solid financial standing [5][11]. Advertising Business - The core online marketing revenue was RMB 192 billion, down 2% year-on-year, attributed to a sluggish macroeconomic environment and slow recovery of offline vertical clients [3][6]. - Approximately 18% of search results in Q2 were generated by AI, up from 11% in May, although this has not yet been monetized effectively [3][6]. - The report anticipates that advertising revenue growth will face greater declines in Q3 2024 compared to Q2, with ongoing pressures expected throughout the year [3][6]. AI Cloud Business - The AI cloud revenue grew by 14% year-on-year, with generative AI contributing 9% of AI cloud revenue in Q2, up from 6.9% in Q1 [3][7]. - The company launched the Wenxin 4.0 Turbo model, enhancing its competitive edge and aiming for higher efficiency and scalability for AI clients [7][8]. - The autonomous driving service "Luobo Kuaipao" provided 899,000 rides in Q2, marking a 26% year-on-year increase, with plans for full self-driving services in Wuhan [7][8].

Investment Rating - The investment rating for Baidu Group-SW is "Buy" (maintained) [2][5][11] Core Views - Short-term advertising growth is under pressure, but cost reduction and efficiency improvements are ongoing, leading to a controlled impact on profit margins. The non-GAAP net profit forecast for 2024-2026 has been revised down to 26.8 billion, 28.7 billion, and 31.9 billion CNY, reflecting year-on-year growth rates of -6.8%, 7.2%, and 10.9% respectively [5] - The current stock price of 82.2 HKD corresponds to a PE ratio of 8.2, 7.7, and 7.1 for 2024-2026, indicating potential valuation uplift driven by future contributions from generative AI to cloud revenue and the commercialization of autonomous driving [5] Financial Summary and Valuation Metrics - Revenue for 2024 is projected at 137.3 billion CNY, with a year-on-year growth of 2.0%. Non-GAAP net profit is expected to be 26.8 billion CNY, reflecting a year-on-year decline of 6.8% [8] - Gross margin is forecasted to be 50.7% in 2024, with net margin at 19.5% and ROE at 10.9% [8] - The diluted EPS for 2024 is estimated at 9.3 CNY, with a P/E ratio of 8.2 [8]

Financial Performance - Total revenue for Q2 2024 was RMB 34,056 million, representing an 8% increase from Q1 2024 and a 0% change year-over-year[3] - Operating profit (non-GAAP) for Q2 2024 was RMB 7,334 million, up 12% from Q1 2024 and a 2% increase year-over-year[3] - Net profit attributable to Baidu for Q2 2024 was RMB 5,210 million, reflecting a 1% increase from Q1 2024 and a 5% increase year-over-year[3] - Baidu's core revenue for Q2 2024 was RMB 26,687 million, showing a 12% increase from Q1 2024 and a 1% increase year-over-year[4] - Total revenue for Q2 2024 was RMB 33.9 billion (USD 4.67 billion), roughly flat compared to the previous year[6] - Baidu's core revenue was RMB 26.7 billion (USD 3.67 billion), a year-on-year increase of 1%[6] - Online marketing revenue was RMB 19.2 billion (USD 2.64 billion), a year-on-year decrease of 2%[6] - Non-online marketing revenue was RMB 7.5 billion (USD 1.03 billion), a year-on-year increase of 10%, primarily driven by the smart cloud business[6] - Operating profit was RMB 5.9 billion (USD 818 million), with a core operating profit margin of 21%[6] - Adjusted EBITDA was RMB 9.1 billion (USD 1.26 billion), with an adjusted EBITDA margin of 27%[7] - Net profit attributable to Baidu was RMB 5.5 billion (USD 755 million), with a diluted earnings per ADS of RMB 15.01 (USD 2.07)[6] User Engagement and Ecosystem - The number of developers in Baidu's ecosystem reached 14.7 million as of June 2024[5] - In June 2024, Baidu APP's monthly active users reached 703 million, a year-on-year increase of 4%[6] - Baidu's autonomous driving service, Apollo Go, provided approximately 899,000 autonomous driving orders in Q2 2024, a 26% year-over-year increase[5] - Baidu's autonomous driving service achieved a significant milestone by providing 100% fully autonomous ride-hailing services in Wuhan[5] - The total number of users for iQIYI reached 7,802 million, with a quarter-over-quarter increase of 12%[16] Research and Development - Research and development expenses totaled RMB 6,381 million, an increase of 4.0% from RMB 5,889 million in the same quarter last year[12] - Baidu launched Wenxin 4.0 Turbo in June 2024, enhancing the performance and cost-effectiveness of its AI models[4] - Research and development expenses amounted to RMB 11,804 million, with a decrease of 423 million from the prior period[24] - Baidu's research and development expenses for the three months ended June 30, 2023, were RMB 1,358 million, up 136% year-over-year[17] Cash Flow and Investments - As of June 30, 2024, cash, cash equivalents, restricted cash, and short-term investments totaled RMB 162 billion (USD 22.29 billion)[7] - Free cash flow was RMB 6.3 billion (USD 862 million)[7] - Cash and cash equivalents increased from RMB 25,231 million on December 31, 2023, to RMB 43,534 million on June 30, 2024, a growth of 72.5%[14] - The company reported a net cash flow from operating activities of RMB 11,691 million for the six months ending June 30, 2023[12] - The company reported a significant investment loss of RMB (4,232) million, impacting overall profitability[24] Future Outlook and Strategy - The company expects continued growth in online marketing services and anticipates total revenue for the next quarter to be between RMB 33,000 million and RMB 35,000 million[12] - Baidu plans to continue investing in new technologies and market expansion strategies to drive future growth[16] - The company plans to continue expanding its market presence and investing in new technologies and products[17] - The company is exploring market expansion opportunities, particularly in international markets, to diversify its revenue streams[19] - Future guidance indicates a focus on increasing operational efficiency and exploring potential mergers and acquisitions to drive growth[25] Financial Position - Total assets rose from RMB 406,759 million on December 31, 2023, to RMB 415,527 million on June 30, 2024, an increase of 2%[15] - Total liabilities decreased from RMB 144,151 million on December 31, 2023, to RMB 142,589 million on June 30, 2024, a reduction of 1.1%[15] - The company’s long-term investments decreased slightly from RMB 47,957 million on December 31, 2023, to RMB 46,193 million on June 30, 2024, a decline of 3.7%[14] - Shareholders' equity totaled RMB 243,626 million, adjusted to RMB 242,273 million under IFRS, showing a decrease[26] Accounting and Reporting - The group records its share of the investee's profits or losses using the equity method according to US GAAP, with adjustments made to align with IFRS[30] - Operating leases are classified as either finance or operating leases, with costs typically recognized on a straight-line basis under US GAAP, while IFRS treats all leases similarly to finance leases[31] - Redeemable preferred shares are classified as redeemable non-controlling interests under US GAAP, while under IFRS, they are classified as financial liabilities measured at fair value[32] - The group uses the straight-line method to recognize equity incentive expenses under US GAAP, while IFRS requires an accelerated method for recognizing employee equity awards[33] - Convertible preferred notes are measured at amortized cost under US GAAP, while under IFRS, they are designated as financial liabilities measured at fair value[34]

Investment Rating - The report assigns a "Buy-A" rating to Baidu Group, with a target price of HKD 111, based on a valuation of RMB 285.1 billion (HKD 310.8 billion) for 2024 [4][6][67]. Core Insights - Baidu is transitioning from an internet-centric model to an AI-first approach, leveraging its advancements in AI models to reshape both B2B and B2C businesses. The company expects significant revenue growth driven by its core search and marketing business, as well as its cloud and intelligent driving sectors [3][67]. - The report forecasts Baidu's revenue for 2024-2026 to be RMB 1433.8 billion, RMB 1523.6 billion, and RMB 1607.8 billion, respectively, with Non-GAAP net profits of RMB 290.9 billion, RMB 309.4 billion, and RMB 327.1 billion [3][67]. Summary by Sections Company Overview - Baidu has evolved from a search engine to a comprehensive internet company integrating AI and content ecosystems, with over 70% of its revenue now driven by AI [1][2][23]. - The company has established three core business lines: mature mobile ecosystem, rapidly growing intelligent cloud, and future-oriented intelligent driving [1][2][23]. AI-Driven Transformation - Baidu's mobile ecosystem is centered around online marketing, with AI enhancing its commercial potential. The company has launched numerous AI-native applications based on its Wenxin model [2][24]. - The intelligent cloud business has seen significant growth, with its revenue share increasing from 8.0% in 2019 to 18.1% in 2023, driven by rising demand for AI model training and inference [2][20]. - Baidu is a pioneer in intelligent driving, with its Apollo platform offering various business models, including providing solutions to automakers and operating Robotaxi services [2][51][55]. Financial Analysis - Baidu's revenue for 2023 reached RMB 1346 billion, a year-on-year increase of 8.8%, with Non-GAAP net profit growing by 39% to RMB 287.5 billion [17][26]. - The company's core business revenue has shown steady growth, with online marketing services contributing RMB 751 billion in 2023, while cloud services reached RMB 187.2 billion [20][27]. Profitability and Valuation - The report anticipates stable gross margins for Baidu, with projections of 53.5% for 2024, and highlights the importance of AI and intelligent driving in driving future growth [62][63]. - The valuation approach includes segmenting the business into online marketing and intelligent cloud, with respective valuations of RMB 177.5 billion and RMB 107.6 billion [63][65].

港股公司报告 | 公司点评 24Q2 前瞻： Apollo Day 2024，无人驾驶的规模运营与收支平衡 百度 24Q2 业绩前瞻：我们预计百度 24Q2 总收入 353.6 亿元，同比 +3.8%； Non-gaap 净利润 79 亿元，同比-1%。 百度 Core：我们预计 24Q2 百度 Core 收入为 273 亿元，同比+3.5%； 其中在线营销收入 200 亿元，同比+2%，我们预计主要受宏观经济影响， 汽车、房地产、招商加盟等行业投放需求恢复不及预期；非在线营销收入 74 亿元，同比+8%；爱奇艺收入 83 亿元，同比+7%。我们认为，24 年 公司受宏观消费影响恢复或不及预期，广告业务或承压，但大语言模型应 用落地广泛，预计推动百度云业务增长。 毛利&利润: 我们预计 24Q2 Non-gaap 运营利润 75 亿元，其中百度 Core 为 73 亿元，运营利润率 27%。 智能云&文心一言：我们预计百度云业务营收达 51 亿元，实现 14%的同 比增长。文心大模型 4.0 Turbo 于 WAVE SUMMIT 深度学习开发者大会 2024 正式发布。文心一言累计用户规模已达 3 亿，日调 ...

Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (9888.HK) with a target price of 165 HKD, compared to the current price of 83.50 HKD [3][13]. Core Insights - Baidu Group is expected to experience a slight decline in total revenue for Q2 2024, with a projected year-on-year decrease of 0.8% to 33.8 billion RMB. The core revenue is also expected to decline by 0.8% to 26.2 billion RMB. The core non-GAAP operating profit is anticipated to be 6.3 billion RMB, down 4.9% year-on-year, resulting in an operating margin of 24.0% [2][11]. Summary by Sections Online Marketing Business - The online marketing services are projected to decline by 4% year-on-year to 18.82 billion RMB in Q2 2024. This decline is attributed to a high base from the previous year, a weak macroeconomic environment affecting small and medium advertisers, and the transition from CPC to CPS models aided by generative AI [2][11]. Non-Online Marketing Business - The non-online marketing business is expected to grow by 8.5% year-on-year to 7.379 billion RMB, primarily driven by Baidu's intelligent cloud services. The contribution from generative AI is anticipated to increase, improving profit margins compared to traditional cloud services [2][11]. AI Business Development - The AI business is showing promising growth, with the Wenxin large model user base exceeding 300 million and daily API calls reaching 500 million. The training efficiency has improved significantly, and Baidu is continuously enhancing its AI application ecosystem [2][11]. Apollo Go Strategy - Apollo Go has established a leading position with operations in 10 cities and aims to achieve economic balance in Wuhan by deploying 1,000 autonomous vehicles. The focus is on optimizing operational management and developing new vehicle models to enhance profitability [2][11]. Profit Forecast and Valuation - The report slightly adjusts the non-GAAP net profit forecasts for 2024-2026 to 28.4 billion, 29.6 billion, and 31.2 billion RMB, respectively. The valuation is set at 12.0x PE for advertising, 4.5x PS for intelligent cloud, and 4.5x PS for other businesses, maintaining a target price of 165 HKD [2][11].

证券研究报告 | 公司点评 2024 年 07 月 28 日 百度集团-SW（09888.HK） 广告或有放缓，Robotaxi 先行优势凸显 百度广告和云业务增速此前略有放缓。回顾 2024Q1，百度实现季度收入 315 亿元，同比增长 1%。百度核心业务中，在线营销广告收入约 170 亿 元，同比增长 3%，增速有所放缓。智能云及其他业务收入 68 亿，同比 增长 6%，我们判断下游企业收紧 IT 支出影响了云的需求。该季度公司 non-GAAP 归母净利润 70.1 亿元，non-GAAP 归母净利润率约 22%。 短期展望，广告增速或因高基数承压。展望 2024Q2，一方面去年广告存 在高基数，另一方面当前下游投放意愿仍然有限，预计收入端继续承压。 云业务短期受益 AI 尚有限，但 AI 增量是未来 5-10 年核心看点。短期 来看，云业务将持续受益于 AI 训练带来的增量需求，中长期看，基于文 心大模型搭建的应用生态正在逐步建立。展望未来，出于降低推理延迟及 生态协同的考虑，基于文心大模型的客户将为百度云打开更大增长空间。 AI 能力和生态的推进呈加速状态。在 6 月 28 日举行的百度 WAVE ...

证券研究报告·海外公司点评·软件服务(HS) 百度集团-SW(09888.HK) 24Q2 业绩前瞻:广告收入承压,关注 AI 及 智能驾驶业务进展 2024 年 07 月 22 日 买入(维持) | --- | --- | --- | --- | --- | --- | |------------------------------|--------|--------|--------|--------|--------| | [Table_EPS] 盈利预测与估值 | 2022A | 2023A | 2024E | 2025E | 2026E | | 营业总收入(百万元) | 123675 | 134598 | 136227 | 145349 | 152794 | | 同比(%) | (0.66) | 8.83 | 1.21 | 6.70 | 5.12 | | Non-GAAP 归母净利润(百万元) | 20680 | 28747 | 29761 | 31810 | 34121 | | 同比(%) | 9.82 | 39.01 | 3.53 | 6.88 | 7.27 | | EPS-最新摊薄(元/股,N ...