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 ...

Investment Rating - The investment rating for Baidu Group-SW (09888) is "Buy" with a target price of 139 HKD, maintaining the rating [3]. Core Insights - Baidu's Q1 2024 total revenue was 31.5 billion HKD, a year-on-year increase of 1.2%, while Non-GAAP net profit reached 7 billion HKD, up 22% year-on-year [1]. - The Baidu Core revenue for Q1 2024 was 23.8 billion HKD, reflecting a 3.5% year-on-year growth, with online marketing revenue at 17.1 billion HKD, also up 3% year-on-year [1]. - Non-online marketing revenue was 6.8 billion HKD, a 6% increase year-on-year, primarily driven by the intelligent cloud business [1]. - AI Cloud revenue reached 4.7 billion HKD, growing 12% year-on-year, with generative AI contributing significantly [1]. - The average monthly active users for Baidu in March was 676 million, a 3% increase year-on-year [1]. Summary by Sections Financial Performance - In Q1 2024, Baidu's Non-GAAP operating profit was 6.7 billion HKD, with Baidu Core contributing 5.6 billion HKD, resulting in an operating profit margin of 24% [1]. - The reasoning behind the profit increase is attributed to Baidu's unique four-layer AI architecture and end-to-end optimization capabilities, which significantly reduced the reasoning costs of ERNIE [1]. AI and Cloud Services - Baidu is leveraging its four-layer AI technology stack to optimize the cost and performance of the ERNIE model, expecting robust revenue growth in Q2 2024 [1]. - The company has launched and improved its MaaS platform tools for enterprise clients, generating 17 billion HKD from online marketing in Q1 2024 [1]. - The developer community for Baidu's PaddlePaddle deep learning framework has grown to 13 million, with compatibility for over 50 different chips [1]. Strategic Partnerships and Future Outlook - Baidu has formed partnerships with major smartphone manufacturers and automotive companies, which are expected to contribute to AI cloud revenue growth [2]. - The autonomous driving service "Luobo Kuaipao" provided approximately 826,000 orders in Q1 2024, a 25% year-on-year increase [2]. - Baidu plans to expand its fully autonomous vehicle fleet to 1,000 units by the end of 2024, tripling its previous capacity [2].

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 95.05 HKD [3]. Core Insights - Apollo Go, Baidu's autonomous taxi service, is experiencing rapid growth in order volume, with over 500 million orders completed as of July 2024, indicating strong market interest and potential for regional profitability [2]. - The autonomous driving service is supported by favorable policies and is expected to achieve significant market growth, with projections estimating the market size for autonomous driving in China to reach 383.2 billion RMB by 2024 [2]. - Cost control measures are in place, with the sixth-generation autonomous vehicle achieving L4 level full autonomy and a 60% reduction in production costs, suggesting a pathway to profitability by the end of 2024 [2]. Summary by Sections Business Development - Apollo Go has expanded its service to over ten cities, achieving a cumulative ride count exceeding 600 million by April 2024, with a 25% year-on-year increase in ride requests in Q1 2024 [2]. - The service has begun 24/7 operations, enhancing vehicle utilization and expanding service coverage [2]. Market Outlook - The report highlights the supportive regulatory environment, including the release of the "Beijing Autonomous Driving Vehicle Regulations" in June 2024, which aims to facilitate the development of autonomous driving [2]. - International competition is intensifying, with Tesla planning to launch its Robotaxi service in August 2024, further validating the market potential for autonomous ride-hailing services [2]. Financial Projections - The report slightly adjusts the Non-GAAP net profit forecasts for 2024-2026 to 28.5 billion, 29.7 billion, and 31.4 billion RMB respectively, reflecting a minor decrease in expectations [2]. - The revenue forecast for 2024 is set at 138.4 billion RMB, with a growth rate of 2.85% [11].

Investment Rating - The report maintains a "Buy" rating for Baidu Group, expecting the stock price to outperform the industry index by over 15% in the next six months [4][12]. Core Insights - Baidu's core business remains robust, with a focus on advancements in AI and intelligent driving. The company reported a revenue of 315.13 billion CNY in Q1 2024, with a year-on-year growth of 1% and a non-GAAP net profit of 70.11 billion CNY, reflecting a 22% increase [2][3]. - The intelligent cloud business is accelerating, with a 12% year-on-year revenue growth in Q1 2024, driven by Gen AI and foundational models [2][3]. - The autonomous driving service, "Luobo Kuaipao," saw a 25% increase in order volume, with expectations of achieving breakeven in the Wuhan region by the end of 2024 [3]. Financial Summary - Revenue projections for 2024-2026 are 146.20 billion CNY, 156.86 billion CNY, and 166.77 billion CNY, respectively, with net profits expected to be 23.09 billion CNY, 26.05 billion CNY, and 29.01 billion CNY [6][7]. - The report indicates a steady increase in EPS, projected at 8.26 CNY, 9.31 CNY, and 10.37 CNY for the years 2024, 2025, and 2026, respectively [6][7]. - The P/E ratio is expected to decrease from 40.1 in 2023 to 10.4 by 2026, indicating improved valuation [2][6]. Business Developments - Baidu's core intelligent cloud business is benefiting from AI-driven innovations, with significant contributions from Gen AI and foundational models, which accounted for 6.9% of AI cloud revenue in Q1 2024 [2][3]. - The launch of lightweight large models has enhanced the development environment for developers, increasing the number of developers in the Baidu PaddlePaddle community to 13 million [2]. - The autonomous driving segment is expected to replicate success in other regions following the anticipated breakeven in Wuhan, supported by advanced technology and cost reductions in vehicle production [3].

Investment Rating - The report maintains a "Buy" rating for Baidu's stock, with a target price of $166 per ADS in the US market and HKD 162 per share in the Hong Kong market [4][10]. Core Insights - Baidu's Q1 2024 revenue reached RMB 315.13 billion, showing a year-over-year increase of 1% but a quarter-over-quarter decrease of 10%. The adjusted operating profit was RMB 66.73 billion, up 4% year-over-year and down 6% quarter-over-quarter [2][10]. - The core business remains stable, with Baidu Core revenue at RMB 238.03 billion, a 4% year-over-year increase, and core advertising revenue at RMB 170 billion, up 3% year-over-year. The intelligent cloud revenue was RMB 47 billion, reflecting a 12% year-over-year growth [2][10]. - The AI restructuring of Baidu's search products is ongoing, which may temporarily impact advertising revenue but is expected to enhance user experience and increase ad efficiency in the long run [2][10]. Financial Forecasts - Revenue projections for 2024 and 2025 are RMB 1,406 billion and RMB 1,522 billion, respectively, representing year-over-year growth rates of 4% and 8% [2][10]. - Adjusted net profit forecasts for 2024 and 2025 are RMB 304 billion and RMB 332 billion, with growth rates of 6% and 9% [2][10]. - The report anticipates that the adjusted net profit for Baidu's core business (excluding iQIYI) will be RMB 298 billion and RMB 325 billion for 2024 and 2025, respectively, both showing a 9% growth rate [10][11]. Valuation Methodology - The report employs a sum-of-the-parts (SOTP) valuation method, estimating the core marketing business's NOPAT profit for 2024 at RMB 206 billion, with a target P/E ratio of 13x, leading to a valuation of $105 per ADS [10][11]. - The intelligent cloud is valued at $15 per ADS based on a price-to-sales ratio of 1.8x, while the autonomous driving technology is valued at $30 per ADS [10][11]. - The total estimated value for Baidu is $582 billion, translating to a reasonable value of $166 per ADS [10][11].