BIDU(BIDU) 交银国际证券·2024-07-18 01:31Investment Rating - The investment rating for Baidu (BIDU US) is "Buy" with a target price of 93.73 [1][10]. Core Insights - Baidu's core revenue for Q2 2024 is expected to be 26.4 billion RMB, showing a year-on-year growth of 0.9%. However, the advertising revenue is projected to decline by 3% to 19 billion RMB due to the impact of AI search modifications on traditional ad clicks and weak demand from certain sectors like real estate and automotive [2][3]. - The cloud business is anticipated to maintain a revenue growth of 14% year-on-year, reaching 5.1 billion RMB, driven by increased demand for AI models and API usage [2][3]. - The company is focusing on cost control and operational efficiency, maintaining an adjusted operating profit margin of 25% despite the pressure on advertising revenue [2][3]. Financial Overview - Revenue (in million RMB): - 2022: 123,675 - 2023: 134,598 - 2024E: 138,761 - 2025E: 148,230 - 2026E: 159,279 - Year-on-year growth rates: - 2023: 8.8% - 2024E: 3.1% - 2025E: 6.8% - 2026E: 7.5% [4][11]. - Net profit (in million RMB): - 2022: 20,680 - 2023: 28,747 - 2024E: 27,651 - 2025E: 31,564 - 2026E: 34,592 [4][11]. - Adjusted operating profit margin is projected to be 25% for 2024, with a net profit margin of 19.8% [2][3][4]. Business Developments - Baidu's autonomous driving initiative, "萝卜快跑," is expanding its operations in over 10 cities, with a significant increase in the proportion of driverless rides in Wuhan, expected to reach 100% in the coming quarters [3]. - The company plans to deploy 1,000 units of the new RT6 model in Wuhan by the end of 2024, which is expected to optimize operational costs [3]. Valuation - The target price has been adjusted to $129, corresponding to 11x and 9x P/E ratios for 2024 and 2025, respectively. The current price reflects a P/E ratio of 6.7, which is the lowest in the industry [3][4].